Pre-Effective Amendment to Registration of Securities by a Small-Business Issuer — Form SB-2
Filing Table of Contents
Document/Exhibit Description Pages Size
1: SB-2/A Amendment No. 2 to Form SB-2 75 264K
2: EX-4 Form of Stock Certificate 1 6K
3: EX-5.2 Legal Consent of Anslow & Jaclin 2 11K
4: EX-10 Escrow Agreement 6 35K
5: EX-10.3 General Contract for Services 3± 15K
6: EX-10.4 General Contract for Services 3± 14K
7: EX-10.5 General Contract for Services 3± 15K
8: EX-10.6 General Contract for Services 2 17K
9: EX-23.1 Consent of Accountant 1 8K
10: EX-23.2 Legal Consent 1 6K
As filed with the Securities
and Exchange Commission on
October 18, 2001
Registration No. 333-63220
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2 TO FORM SB-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
National Companies, Inc. (formerly known as The Nationwide Companies, Inc.)
(Name of small business issuer in our charter)
Florida 5122 65-0962627
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
4350 Oakes Rd., Suite 512
Davie, Florida 33314
(954) 584-5080
(Address and telephone number of principal executive offices)
4350 Oakes Rd., Suite 512
Davie, Florida 33314
(954) 584-5080
(Address of principal place of business or intended principal place of business)
Richard Loehr, Chief Executive Officer and Chairman of the Board of Directors
National Companies, Inc.
4350 Oakes Rd., Suite 512
Davie, Florida 33314
(954) 584-5080
(Name, address and telephone number of agent for service)
Copies of communications to:
Richard I. Anslow, Esq,
Anslow & Jaclin, LLP
4400 Route 9 South, 2nd floor
Freehold, New Jersey 07728
Approximate date of commencement of proposed sale to the public: as soon as
practicable after the effective date of this registration statement
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the securities act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. [ ]
1
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.[ ]
Shares Offering Price Gross Proceeds to the Company
Minimum 100,000 $5.00 $500,000
Maximum 1,000,000 $5.00 $5,000,000
Selling Shareholders may also be selling up to 500,000 additional shares
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
NO ONE IS AUTHORIZED TO GIVE ANY INFORMATION NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THIS OFFERING AND, IF GIVEN, YOU SHOULD NOT RELY ON THIS
INFORMATION. THIS PROSPECTUS SHOULD NOT BE CONSIDERED AN OFFER TO ANY PERSON TO
WHOM SUCH AN OFFER WOULD BE UNLAWFUL.
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE 8 OF THIS
PROSPECTUS.
INFORMATION ON US
We provide a range of benefit packages offering diversified products and
services to our associates located throughout the United States. Although we are
not presently qualified for public market quotation we intend to qualify our
shares for quotation on the OTC Bulletin Board concurrently with the date of
this prospectus.
TERMS OF THE INITIAL OFFERING PERIOD
< The initial offering period will end 12 months from the date listed in this
prospectus unless it is terminated earlier.
< During the initial offering period, we will offer shares at $5.00 per share
with the minimum purchase being $25,000 (5,000 shares). Since there is no
selling commission, all proceeds from the sales will go to us.
< This offering is being made on a self-underwritten basis by us through our
only principal, Richard Loehr, without the use of securities brokers. All
proceeds from the sale of shares will be held in an attorney escrow account
maintained by Anslow & Jaclin, LLP, Freehold, New Jersey.
< If we do not sell a minimum of $500,000 of our shares during the initial
offering period, we will return all money from shares sold without interest
within thirty(30) days of the close of the initial offering period.
ADDITIONAL SHARES BEING OFFERED
We will not receive any proceeds from the additional 500,000 shares which may be
offered by our selling shareholders.
You must meet certain requirements in order to purchase the shares offered in
this prospectus. You must indicate in the Subscription Agreement and Power of
Attorney that you have either a net worth of at least $100,000 (exclusive of
home, furnishings and automobiles) or a net worth of at least $50,000 (also
exclusive of home, furnishings and automobiles) and an annual adjusted gross
income of not less than $25,000.
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Table of Contents
Descriptive Title Page
PROSPECTUS SUMMARY 4
SUMMARY FINANCIAL DATA 6
RISK FACTORS 7
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS 13
USE OF PROCEEDS 14
DETERMINATION OF OFFERING PRICE 15
CAPITALIZATION 15
DILUTION 16
FIDUCIARY RESPONSIBILITY OF OUR MANAGEMENT 17
SELLING SECURITY HOLDERS 18
SHARE ELIGIBLE FOR FUTURE SALE 22
PLAN OF DISTRIBUTION 23
LEGAL PROCEEDINGS 24
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS 25
PRINCIPAL SHAREHOLDERS 29
ABOUT US 30
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 38
ABSENCE OF CURRENT PUBLIC MARKET 43
DESCRIPTION OF CAPITAL STOCK 43
EXECUTIVE COMPENSATION 44
SUBSCRIPTION PROCEDURE 46
ERISA CONSIDERATIONS 47
LEGAL MATTERS 47
EXPERTS 47
WHERE YOU CAN FIND MORE INFORMATION 47
CHANGES AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 49
APPENDIX I (FINANCIAL STATEMENTS) F-1
EXHIBIT A - SUBSCRIPTION AGREEMENT A-1
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS II-1
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION II-2
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES II-2
ITEM 27. EXHIBITS II-4
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PROSPECTUS SUMMARY
The following is a summary of material information which is supported in its
entirety by detailed information(including financial information and notes
thereto) contained in this prospectus. This highlighted summary is intended for
reference only. Before making any investment, you should carefully consider the
information under the heading "Risk Factors." Please note that throughout this
prospectus, the words "we", "our" or "us" refer to National Companies, Inc. and
not to the selling stockholders.
About Us
We are a direct sales and distribution organization. Our ability to aggregate
services and products enables us to offer discounts through the power of group
buying. We offer a wide variety of products and services. We have developed a
marketing system based on the one-to- one marketing concept of direct selling,
creating value for us and the potential for significant revenue for our
Independent Marketing Directors. In addition to our suppliers, we have developed
an affiliation with four companies to satisfy market demand from our associates
for products and services for which we did not have a suitable provider. Our
benefit packages include automotive discounts, financing, leasing, mortgages,
life and health insurance, travel and vacation packages, telecommunications and
more. Other benefits include an array of consumer-oriented products and services
including car care products, dietary and nutritional supplements, personal care,
jewelry and stained glass.
We generate revenue by selling benefit packages which provide goods and services
provided through suppliers. Goods and services available through the benefit
packages include: automobiles, automobile extended warranties, health and life
insurance, travel services, automotive products, fruit and gift products,
jewelry, UPS next day letters, miracle ear hearing aids, eye care, vitamin
supplements, cosmetics and skin care products, mortgage loans and
telecommunication long distance services. If additional products or services are
added to the benefits packages they will be provided by our existing or future
suppliers.
Our independent contractors are called Independent Marketing Directors, and are
compensated for the sale of our benefit packages. In direct sales, individuals
may also be compensated from group efforts. We compensate our Independent
Marketing Directors with commissions and bonuses based on individual and group
efforts.
Securities Offered by Us
The maximum amount of shares offered ($5,000,000): 1,000,000 shares at $5.00 per
share.
The minimum amount of shares offered ($500,000): 100,000 shares at $5.00 per
share.
Although we are not presently qualified for public quotation, we intend to
qualify our shares for quotation on the OTC Bulletin Board concurrently as of
the effective date of this prospectus or as soon after as possible.
4
Offering Period(s)
Initial: During the initial offering period, we will offer shares for a period
of twelve(12) months from the effective date of this prospectus unless it is
terminated earlier. During this initial offering period we will break escrow
once a minimum of $500,000 in shares is sold. There will be no extension of the
offering period.
Proceeds Held
Proceeds from these sales will not be paid to us until the $500,000 minimum in
sales is achieved. Investors are reminded that, given the twelve(12) month
duration of the initial offering period, investments may be held in escrow. If
the minimum $500,000 in shares is not raised in the initial offering period we
will not return proceeds to the investors until thirty (30) days after the close
of the initial offering period. No interest will be earned on the funds in the
escrow account. Even if interest is earned, it will not be distributed to
investors but will be distributed to us. There will be no fees or other amounts
deducted from returned funds.
Investor Requirements
You must meet certain requirements in order to purchase the shares offered in
this prospectus. You must indicate in the Subscription Agreement and Power of
Attorney that you have either a net worth of at least $100,000 (exclusive of
home, furnishings and automobiles) or a net worth of at least $50,000 (also
exclusive of home, furnishings and automobiles) and an annual adjusted gross
income of not less than $25,000.
Minimum Subscription
The minimum purchase is $25,000 and/or 5,000 shares.
Risks and Conflicts of Interest
We have had a history of significant losses. For the years ended December 31,
2000 and 1999, we had net income of $528,829 and a net loss of ($1,084,705)
respectively on revenues of $6,392,752 for the calendar year 2000 and revenues
of $2,065,549 for the calendar year 1999. There is no assurance that we can
continue to generate net income and increase revenues or successfully expand our
operations in the future. We are subject to all of the problems, expenses,
delays and other risks inherent in a business with a relatively short history of
operations and in a business seeking to expand our operations. Therefore, we
cannot predict with certainty whether and if we will be capable of becoming a
profitable entity. This investment involves substantial risks. Risks inherent in
investing in us are discussed under "Risk Factors."
5
Plan of Distribution
This offering of a minimum of 100,000 of our shares and a maximum of 1,000,000
of our shares is being made on a self-underwritten basis by us through our
officers and directors who will not be paid any commissions or other
compensation and without the use of securities brokers.
Selling Shareholders may also be selling up to 500,000 additional shares. Such
shares of our common stock may be sold from time to time to purchasers directly
by the Selling Shareholders. Alternatively, the Selling Shareholders may from
time to time offer shares through underwriters, dealers or agents, who may
receive compensation in the form of underwriting discounts, concessions or
commissions from the selling security holders for whom they may act as agent.
The Selling Shareholders and any underwriters, dealers or agents that
participate in the distribution of our common stock may be deemed to be
underwriters, and any commissions or concessions received by any such
underwriters, dealers or agents may be deemed to be underwriting discounts and
commissions under the Securities Act. Shares may be sold from time to time by
the Selling Shareholders in one or more transactions at a fixed offering price,
which may be changed, or at varying prices determined at the time of sale or at
negotiated prices. We may indemnify any underwriter against specific civil
liabilities, including liabilities under the Securities Act. We will bear all
expenses of the offering of shares of our common stock by the Selling
Shareholders other than payment that they may agree to make to underwriters.
Application of Proceeds
The proceeds of the offering are to be used for technology related matters
(computer hardware, increased Internet capabilities and custom software
development); business development (research and market development of
additional products and service benefit offerings) and general corporate
purposes, including working capital.
SUMMARY FINANCIAL DATA
The following is a summary of the financial data contained in this prospectus.
This information reflects our operations for the period from inception to June
30, 2001, is derived from, and qualified by reference to, the financial
statements of Nationwide which have been audited through December 31, 2000, by
Robert Jarkow, CPA, Independent Certified Public Accountant. The information
below should be read in conjunction with the consolidated Financial Statements
and Notes thereto included in this Prospectus. Nationwide's historical operating
results are not necessarily indicative of the results of any future period.
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[Enlarge/Download Table]
Six Months Ended Year Ended January 15, 1999
June 30, 2001 December 31, (Inception)
(unaudited) 2000 to December 31,
1999
STATEMENT OF OPERATIONS
Revenues $3,422,473 $6,392,752 $2,065,549
Net Income(loss) $(63,417) $528,829 ($1,084,705)
Net Income(loss)per share $($0.025) $$0.21 $($0.43)
Number of Shares used in 2,500,000 2,500,000 2,500,000
calculation of net loss per share (2)
BALANCE SHEET DATA June 30, 2001
Working Capital $63,523
Total Assets $10,340,809
Total Shareholder's (deficit) ($574,611)
RISK FACTORS
An investment in our common stock involves a high degree of risk. You should
carefully consider the following risk factors in evaluating our business before
purchasing any of our common stock. If any of these risks, or other risks not
presently known to us, or that we currently believe are not significant,
develops into an actual event, then our business, financial condition and
results of operations could be adversely affected. If that happens, the market
price of our common stock could decline, and you may lose all or part of your
investment.
WE DEPEND ON OUR PRESIDENT/CHIEF EXECUTIVE OFFICER AND OTHER MANAGEMENT
PERSONNEL TO OPERATE AND GROW AND IF WE LOSE THE SERVICES OF THESE EMPLOYEES WE
WILL BE UNABLE TO PROVIDE THE SERVICES TO OUR CLIENTS
We believe the efforts of our executive officers and other management personnel,
including Richard L. Loehr, our President and Chief Executive Officer are
essential to our operations and growth. The loss of the services of Mr. Loehr
and others would materially adversely affect us. We do not carry key-man life
insurance on any such individuals. We presently have no agreements with our
management personnel to retain their services.
WE HAVE HAD SIGNIFICANT LOSSES AND MAY NOT BE ABLE TO CONTINUE TO SUCCESSFULLY
EXPAND OUR REVENUES AND REMAIN PROFITABLE
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For the years ended December 31, 2000 and 1999, we had net income of $528,829
and a net loss of ($1,084,705) respectively on revenues of $6,392,752 for the
calendar year 2000 and revenues of $2,065,549 for the calendar year 1999. We
recently consolidated offices by relocating a data processing office, in an
effort to create a higher level of efficiency and utilization of our resources
and decreasing operating expenses. At this point in time we do not expect
material changes in our operating expenses in the near term, and we are unable
to quantify to what extent operating expenses may increase in the future. We
cannot assure you that we can continue to generate net income and increase
revenues or successfully expand our operations in the future. We are subject to
all of the problems, expenses, delays and other risks inherent in a business
with a relatively short history of operations and in a business seeking to
expand our operations. Therefore, we cannot predict with certainty the success
or failure of our future operations.
WE MAY EXPERIENCE DIFFICULTY DEVELOPING NEW PRODUCT AND SERVICE BENEFITS BASED
ON OUR INEXPERIENCE WHICH MAY HAVE A NEGATIVE EFFECT ON OUR BUSINESS
If we attempt to develop new product and service benefit lines outside of our
present lines, that effort could have a negative effect on our results of
operations. Our efforts in developing new line of services and products involve
inherent risks, including risks associated with inexperience and competition
from mature participants in the markets we enter. Our inexperience may result in
costly decisions that could have a negative effect on our business, financial
condition and results of operations.
FURTHER EXPANSION IS DEPENDENT UPON FACTORS BEYOND OUR CONTROL AND OUR FAILURE
TO EXPAND MAY MAKE IT DIFFICULT FOR US TO COMPETE SUCCESSFULLY FOR NEW BUSINESS
Our expansion plans are based primarily upon increasing our existing sales and
the offering of additional lines of business. Our growth will depend, in part,
upon the development of new business lines which will be dependent upon a number
of factors:
- our ability to identify and acquire suitable alternative business
lines;
- our ability to finance the expansion of sales and future business
lines;
- achieving market acceptance of our business lines;
- regulatory constraints;
- our ability to market and provide additional business lines on a
cost-effective basis; and
- whether anticipated performance levels of new business lines will be
achieved.
8
Many of the factors required for the new business lines to succeed will be
beyond our control. These include, but are not limited to, the effectiveness of
our marketing efforts in the sale of our benefit packages.
OUR DEPENDENCE ON A LIMITED NUMBER OF SUPPLIERS AND AFFILIATED COMPANIES MAY
CAUSE OUR SUPPLIES TO BE REDUCED AND LIMIT OUR ABILITY TO MEET OUR CONSUMER
DEMANDS
We do not intend to produce our own private label business lines since we
believe that the availability of existing and highly visible business lines from
suppliers and third parties is adequate to meet our needs. We maintain limited
existing contractual commitments or other arrangements for the future access to
various business lines. Neither our suppliers nor affiliated companies comprise
a majority of our revenues. We generate revenue from the sale of the benefit
packages. Should the relationships with our suppliers and affiliated companies
terminate, our supply may be reduced and we may not be able to meet consumer
demands.
Our Independent Marketing Directors are independent contractors that have
applied to us, and have been authorized to market our benefit package and to be
compensated for the sale of our benefit package. Should the relationships with
our suppliers and affiliated companies terminate, our supply may be reduced and
we may not be able to meet consumer demands.
WE FACE SIGNIFICANT COMPETITION FROM MORE ESTABLISHED COMPANIES WHICH COULD
PREVENT US FROM ESTABLISHING A STABLE AND LONG LASTING MARKET PRESENCE
We compete intensely with other direct sales companies in the recruitment of
IMD's, of which there are many such companies. Some of the largest of these are
Market America, Nature's Sunshine, Inc., Herbalife International, Inc., Amway
n/k/a Alticor, Inc., Rexall Sundown, Inc., Nu Skin and Excel Communications.
Each of these companies is substantially larger than us and has significantly
greater financial and personnel resources.
Furthermore, we are a relatively new participant in the direct sales marketplace
and as such can not be considered to be directly competitive with such companies
at this time. Nevertheless, it is our goal to become a viable direct sales
company with our own market presence and productive IMDs. However, there is no
assurance that we will be able to establish a stable and long lasting market
presence.
SALES BY SELLING SECURITY HOLDERS BELOW THE $5.00 OFFERING PRICE MAY CAUSE OUR
STOCK PRICE TO FALL AND DECREASE DEMAND IN THE PRIMARY OFFERING WHICH MAY
DECREASE THE VALUE OF YOUR INVESTMENT
The selling security holder offering will run concurrently with the primary
offering. All of the stock owned by the selling security holders, including our
officers and directors, will be registered by the registration statement of
which this prospectus is a part. The selling security holders may sell some or
all of their shares immediately after they are registered. In the event that the
selling security holders sell some or all of their shares, which could occur
while we are still selling shares directly to investors in this offering,
trading prices for the shares could fall below the offering price of the shares.
In such event, we may be unable to sell all of the shares to investors, which
would negatively impact the offering. As a result, our planned operations may
suffer from inadequate working capital.
9
DIRECT SELLING ACTIVITIES ARE REGULATED BY VARIOUS GOVERNMENTAL AGENCIES WHICH
MAY MAKE IT MORE DIFFICULT FOR US TO OPERATE OUR BUSINESS
Regulatory changes may impose significant restrictions and additional costs or
other burdens on our business. The processing, formulation, packaging, labeling
and advertising of our supplier's health care products is subject to regulation
by one or more federal agencies, including the FDA, the Federal Trade
Commission, the Consumer Product Safety Commission and the United States
Department of Agriculture and the Environmental Protection Agency. These
activities are also regulated by various agencies of the states and localities.
The FDA, in particular, regulates the advertising, labeling and sales of vitamin
and mineral supplements if the FDA believes they are unapproved drugs or food
additives rather than food supplements. Compliance with the rules and
regulations of such agencies is complex and entails continued diligence. In
addition, the Compliance Policy Guide issued by the FDA establishes the manner
in which homeopathic drugs are regulated. The Compliance Policy Guide provides
that homeopathic drugs may only contain ingredients that are generally
recognized as homeopathic. Compliance with the Compliance Policy Guide requires
detailed scrutiny and diligence.
These laws and regulations are generally intended to prevent fraudulent or
deceptive schemes. Such schemes, often referred to as "pyramid" or "chain sales"
schemes, often promise quick rewards for little or no effort, require high entry
costs, use high pressure recruiting methods and/or do not involve legitimate
products.
We cannot determine the effect that future governmental regulations or a
administrative orders may have on our business. Moreover, governmental
regulations in countries where we plan to commence or expand operations may
prevent, delay or limit market entry of certain products or require the
reformulation of such products. Regulatory action, whether or not it results in
a final determination adverse to us has the potential to create negative
publicity, with detrimental effects on the motivation and recruitment of IMD's
and, consequently, on our possible future sales and earnings.
WE ARE DEPENDENT UPON OUR INDEPENDENT MARKETING DIRECTORS & ASSOCIATES AND THE
FAILURE TO MAINTAIN SUCH PARTIES WILL HURT THE SALES OF OUR PRODUCTS AND
SERVICES
We market our benefit packages through approximately 25,000 active Independent
Marketing Directors. Due to the nature of an associate, we are unable to
determine exactly how many associates are with Nationwide. For example, we have
municipalities which have purchased benefit packages whose employees are
associates, and currently we are unaware of the exact number of employees a
municipality may have that are associates. IMD agreements are voluntarily
terminable by the IMD at any time. Our revenue is directly dependent upon the
efforts of these independent marketing directors, and any growth in future sales
volume will require an increase in the productivity of these IMDs and/or growth
in the total number of IMDs. As is typical in the direct selling industry, there
is turnover in IMDs from year to year, which requires the training of new IMDs
by existing IMDs to maintain or increase the overall number of IMDs and
associates and motivate new and existing IMDs. There may be seasonal decreases
in IMD sales in some of the areas in which we operate because of local holidays
and customary vacation periods. The size of the IMD force can also be
particularly impacted by general economic and business conditions and a number
of intangible factors such as adverse publicity or the public's perception of
our products or direct selling businesses in general. We cannot assure you that
the number or productivity of our IMDs will be sustained at current levels or
increased in the future.
10
An IMD differs from an associate due to the fact that they are an individual who
has completed an application to become such, at no cost to that individual, they
are able to market Nationwide's benefit packages. An associate is an individual,
business or municipality which has purchased a benefit package to utilize the
product and service offerings available. In addition, an IMD does not have to
purchase a benefits package.
OUR LIABILITY INSURANCE MAY NOT BE SUFFICIENT TO COVER US AND ANY SHORTFALL MAY
REQUIRE US TO CEASE OPERATIONS OR EXPEND SIGNIFICANT RESOURCES AND ENERGY
DEFENDING SUCH CLAIMS
The offering of alternative health care products exposes us to the possibility
of personal injury, product or other liability claims. We carry general
liability insurance in the amount of $1,000,000 per occurrence limit and
$1,000,000 in the aggregate, including product liability insurance. A successful
claim against us which exceeds, or is not covered by, our insurance policies
could require us to cease operations. In addition, we may be required to expend
significant resources and energy in defending against any claims.
YOU MAY NOT BE ABLE TO LIQUIDATE YOUR INVESTMENT SINCE THERE IS NO ASSURANCE
THAT A PUBLIC MARKET WILL DEVELOP FOR OUR COMMON STOCK OR THAT OUR COMMON STOCK
WILL EVER BE APPROVED FOR TRADING ON A RECOGNIZED STOCK EXCHANGE
There has been no trading market for the shares and none is anticipated to
develop in the near future. We intend to apply for a listing on the OTC Bulletin
Board concurrently with the filing of this offering. It is unlikely that a
trading market will develop in the near term or that, if developed, it will be
sustained. In the event a regular public trading market does not develop, any
investment in Nationwide's Common Stock would be highly illiquid. Accordingly,
an investor in the Shares may not be able to sell the Shares readily, if at all.
SELLING SHAREHOLDERS MAY IMPACT OUR STOCK VALUE THROUGH THE EXECUTION OF SHORT
SALES WHICH MAY DECREASE THE VALUE OF OUR COMMON STOCK
Short sales are transactions in which a selling shareholder sells a security it
does not own. To complete the transaction, a selling shareholder must borrow the
security to make delivery to the buyer. The selling shareholder is then
obligated to replace the security borrowed by purchasing the security at the
market price at the time of replacement. The price at such time may be higher or
lower than the price at which the security was sold by the selling shareholder.
If the underlying security goes down in price between the time the selling
shareholder sells our security and buys it back, the selling shareholder will
realize a gain on the transaction. Conversely, if the underlying security goes
up in price during the period, the selling shareholder will realize a loss on
the transaction. The risk of such price increases is the principal risk of
engaging in short sales. Such short selling could impact the value of our stock
in an extreme and volatile manner to the detriment of other shareholders.
11
THIS OFFERING IS BEING SELF-UNDERWRITTEN AND NO INDEPENDENT DUE DILIGENCE HAS
BEEN UNDERTAKEN
This offering is being self-underwritten by our officers and directors and
potential investors should give careful consideration to all aspects of this
offering before any investment is made. Due to the absence of an underwriter, no
due diligence examination has been performed in conjunction with this offering
such as would have been performed in an underwritten offering.
INVESTORS IN THIS OFFERING WILL BEAR MOST OF THE RISK OF LOSS EVEN THOUGH OUR
PRESENT OFFICER AND DIRECTOR WILL CONTROL US
Our present officer and director owns 80% of our common shares before the
registration and issuance of additional shares from this offering. This
controlling interest was acquired at a cost substantially below the offering
price. Specifically, the aggregate amount paid for the interest acquired by Mr.
Loehr is $110,000 or $.06 per share. Accordingly, purchasers of the shares
offered will bear most of the risk of loss although our control will be
maintained by the existing stockholders by virtue of their percentage stock
ownership.
WE RECENTLY HAD A NET INCOME BUT HAVE A HISTORY OF NET LOSSES AND MAY REQUIRE
ADDITIONAL FINANCING IN ORDER TO CONTINUE OUR BUSINESS OPERATIONS
Since inception, we have had a deficit; however, as of the calendar year ending
December 31, 2000, we have net income on a consolidated basis of $528,829. We
cannot assure you that we can continue to realize net income and generate
increased revenues at the same or similar rate as in the immediate past and/or
to successfully expand our operations in the future. Moreover, as of the six
months ended June 30, 2001 we experienced a net loss of ($63,417) as compared to
a net loss of ($283,473) for the six months ended June 30, 2000. This net loss
resulted even though revenue for the six months ended June 30, 2001 was
$3,422,473 as compared to $946,055 for the six months ended June 30, 2000.
Our ultimate success in fully implementing our business model and meeting our
cash flow obligations is dependent on our ability to continue to recognize
increased revenues in the form of benefit package sales. Although we believe we
will continue to receive increased benefit package sales there can be no
assurances. In the event that we do not recognize increased benefit package
sales we may need to raise additional capital, as to which there can be no
assurances. We currently have a positive cash balance as of the quarter ending
June 30, 2001 of $1,450,780. We feel that our present capital is sufficient to
meet our operating cash flow needs through June 30, 2002 in the event our cash
flows from operating, investing and financing activities are insufficient to
meet our expected operating obligations as they come due.
12
In the event that cash from operations and other available funds prove to be
insufficient to fund our anticipated operations, we may seek additional
financing. There can be no assurance that, if additional financing is required,
it will be available on acceptable terms, or at all. Additional financing may
involve substantial dilution to the interests of our then current shareholders.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
We have paid a $75,000 consulting fee to Global Business Resources, Inc., a
Florida corporation which is controlled by Peter Goldstein who is the husband of
Shelley Goldstein, the former sole officer and director of Focus Financial
Group, Inc., and beneficial owner of 238,000 of our shares. This consulting fee
was for management, operational, financial and organizational consulting
received by us in addition to our merger with Focus Financial Group, Inc.
We have no plans to issue any additional securities to management, promoters,
affiliates or associates at the present time. If our Board of Directors adopts
an employee stock option or pension plan, we may issue additional shares
according to the terms of this plan.
Although we have a very large amount of authorized but un-issued common stock,
we intend to reserve this stock to implement continued expansion of the
business.
Business with Our Affiliates
We have only done business with affiliates at the prices and on terms comparable
to those of non-affiliates. Our Board of Directors must approve any related
party contract or transaction. Mr. Loehr, who is presently our Chairman and CEO,
has agreed to abstain from voting on any related party contract or transaction
involving his existing businesses. Nevertheless, it would still be possible for
our Board of Directors to authorize such a contract or transaction with Mr.
Loehr's existing businesses or any other affiliate even if the terms were unfair
to us.
We do not intend to use the proceeds from this offering to make payments to any
promoters, management (except as salaries, benefits and out of pocket expenses)
or any of their affiliates. We have no present intention of acquiring any assets
by any promoter, management or their affiliates or associates.
There are no arrangements or agreements between non-management shareholders and
management under which non-management shareholders may directly or indirectly
participate in or influence our affairs.
There are four affiliated companies owned by our majority shareholder, Mr.
Loehr, which provide product and service offerings that are included in our
benefit packages. These companies do not provide products or services directly
to us. Furthermore we pay no consideration to any of the affiliated companies
for the products and services provided to our associates from our benefit
package. The affiliated companies generate revenue like any of our other
suppliers, through the purchase of the products and services offered in the
benefit package by our associates. One affiliate pays a commission to us based
upon product sales. The revenue received by us from this affiliate is reflected
in the Statement of Operations as commissions. The following sets forth the four
affiliated companies:
13
1. Team National Products, Inc., a Florida corporation, 100% ownership by
Richard and Mary Lou Loehr.
2. National Travel Consultants, Inc., a Florida corporation, 100% ownership by
Richard and Mary Lou Loehr.
3. National Health Plans Plus, Inc. a Florida corporation, 100% ownership by
Richard and Mary Lou Loehr.
4. National Automotive, Inc. a Florida corporation, 100% ownership by Richard
and Mary Lou Loehr.
As of December 31, 2000, we advanced, interest free, the sum of $465,634 to our
affiliate, Team National Products, Inc. The money advanced to Team National
Products, Inc. was repaid in full to us. $351,359 was repaid in the first
quarter of 2001 and the balance of $114,275 was repaid to us in the second
quarter of 2001.
USE OF PROCEEDS
Net proceeds from the sale of the shares of common stock are estimated to be
$4,965,050 if the $5,000,000 maximum number of shares is sold and $465,050 if
only the $500,000 minimum number of shares is sold. We will not receive any
money from the sales of shares by the selling shareholders.
None of the estimates below include income from revenue. We anticipate receiving
income from our day-to-day operations, but there can be no assurance that this
income will be sufficient to generate a positive cash flow before the sales from
this offering are expended.
Gross Proceeds $500,000 $2,550,000 $5,000,000
[Enlarge/Download Table]
Dollar Dollar Dollar
Amount Percentage Amount Percentage Amount
Percentage
Offering Expenses $34,950 6.99% $34,950 1.40% $34,950 .70%
Technology (Computer hardware,
increased Internet capabilities
and custom software development)
362,000 72.40% 1,302,500 52.10% 1,612,500 32.20%
Business Development (Research
and market development of additional
product and service benefit offerings)
80,550 16.11% 380,000 15.20% 625,000 12.50%
General Corporate Purposes
including Working Capital
22,500 4.50% 783,250 31.33% 2,730,000 54.60%
Gross Proceeds 500,000 100% 2,550,000 100% 5,000,000 100%
Less Offering Expenses 34,950 34,950 34,950
Net Proceeds $465,050 $2,515,050 $4,965,050
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We reserve the right to change the application of proceeds depending on
unforeseen circumstances at the time of this offering. The intent is to
implement our business plan to the fullest extent possible with funds raised in
this offering.
DETERMINATION OF OFFERING PRICE
The initial public offering price of the shares of our common stock has been
determined arbitrarily by us and does not necessarily bear any relationship to
our book value, assets, past operating results, financial condition or any other
established criteria of value. Although our common stock is not listed on a
public exchange, we will be filing to obtain a listing on the Over The Counter
Bulletin Board (OTCBB) concurrently with the filing of this prospectus. However,
there is no assurance that our common stock, once it becomes listed on a public
exchange, will trade at market prices in excess of the initial public offering
price as prices for the common stock in any public market which may develop will
be determined in the marketplace and may be influenced by many factors,
including the depth and liquidity of the market for the common stock, investor
perception of us and general economic and market conditions.
CAPITALIZATION
The following table shows the capitalization as of June 30, 2000 and the pro
forma capitalization on the same date. This information reflects the sale of the
100,000 shares offered for estimated net proceeds of $4.65 per share. This
information also indicates the sale of 1,000,000 shares offered for estimated
net proceeds of $4.96 per share.
As Adjusted
[Enlarge/Download Table]
Actual Minimum Maximum
Shareholders' equity
Common stock, $.001 par value;
10,000,000 Shares authorized; 2,500,000 Shares
issued and outstanding; 100,000 (Minimum) and
1,000,000 (Maximum) Shares to be
issued and outstanding, as adjusted $2,500 $2,600 $3,500
Additional Paid-in capital 42,182 507,132 5,006,232
Deficit (619,293) (619,293) (619,293)
Total Shareholders' equity (deficit) and total capitalization ($574,611) ($109,561) $4,390,439
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DILUTION
The following table shows the percentage of equity the investors in this
offering will own compared to the percentage of equity owned by the present
shareholders and the comparative amounts paid for the shares by the investors as
compared to the total consideration paid by the our present shareholders.
Dilution for $500,000 Offering
[Download Table]
Initial public offering price per share $5.00 100.0%
Net tangible book value per share before offering (0.23) (4.6%)
Increase per share attributable to new shareholders 0.19 3.8%
Pro forma net tangible book value per share after offering ($0.04) (1.0%)
------- ------
Total dilution per share to new shareholders $5.04 100.8%
--------- ------
[Download Table]
Total
Shares Purchased Consideration Average Price
Number Percent Amount Percent Per Share
------ ------- ------ ------- ---------
Existing Shares 2,500,000 96.15% 44,682 8.20% 0.0179
New Shares 100,000 3.85% 500,000 91.80% 5.00
------- ------ ------- ------ ----
2,600,000 100.00 544,682 100.00 0.2095
Dilution for $5,000,000 Offering
[Download Table]
Initial public offering price per Share $5.00 100.0%
Net tangible book value per Share before offering $(0.23) (4.6%)
Increase per Share attributable to new Shareholders $1.48 29.6%
Pro forma net tangible book value per Share after offering
$1.25 25.00%
----- ------
Total dilution per Share to new Shareholders $3.75 75.00%
===== ======
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Shares Purchased Total Consideration
[Enlarge/Download Table]
Total
Shares Purchased Consideration Average Price
Number Percent Amount Percent Per Share
------ ------- ------ ------- ---------
Existing Shares 2,500,000 71.43 $ 44,682 .89 $0.0179
New Shares 1,000,000 28.57 5,000,000 99.11 5.00
--------- ----- --------- ----- ----
3,500,000 100.00 $5,044,682 100.00 $1.44
FIDUCIARY RESPONSIBILITY OF OUR MANAGEMENT
Our counsel has advised us that we have a fiduciary responsibility for the
safekeeping and use of all our assets. Management is accountable to each
shareholder and required to exercise good faith and integrity with respect to
our affairs. (For example, management cannot commingle our property with the
property of any other person, including that of any current or future member of
management.)
The SEC has stated that, to the extent any exculpatory or indemnification
provision includes indemnification for liabilities arising under the Securities
Act of 1933, it is the opinion of the SEC that this indemnification is contrary
to public policy and, therefore, unenforceable. Shareholders who believe that
our management may have violated applicable law regarding fiduciary duties
should consult with their own counsel as to their evaluation of the status of
the law at that time.
According to federal and state statutes, including the Florida General
Corporation Law, shareholders in a corporation have the right to bring class
action suites in federal court to enforce their rights under federal securities
laws. Shareholders who have suffered losses in connection with the purchase or
sale of their shares may be able to recover any such losses from a corporation's
management where the losses result from a violation of SEC rules.
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SELLING SECURITY HOLDERS
Of the 1,500,000 shares of our common stock covered by this Prospectus a maximum
of 1,000,000 are being offered by us and the remaining 500,000 are being offered
by existing shareholders.
The following table sets forth the name of each selling security holder, the
number or shares of common stock beneficially owned by the selling security
holder as of June 30, 2001, and the number of shares being offered by each
selling security holder. During the past three years no selling security holder
has been our officer, director or affiliate, nor has any selling security holder
had any material relationship with us during the period, other than as set forth
below.
Selling security holders of shares of Focus Financial Group, Inc., or their
transferees who were promoters or affiliates may be deemed underwriters and,
therefore, can not sell their shares in reliance of Rule 144. Mr. Loehr is not a
selling shareholder in the present offering. The additional shares which are
being offered for sale by us are from treasury stock and are not shares owned
directly or indirectly by Mr. Loehr.
The shares of common stock being offered by this prospectus are being registered
to permit public secondary trading, and the selling security holders may offer
all or part of the shares for resale from time to time. However, the selling
security holders are under no obligation to sell all or any portion of the
shares of common stock immediately under this prospectus. Because the selling
security holders may sell all or a portion of their shares of common stock, no
estimate can be given as to the number of shares of common stock that will be
held by any selling security holder upon termination of any offering made under
this prospectus; accordingly, the following table assumes the sale of all shares
of common stock by the selling security holders immediately following the date
of this prospectus.
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Shares Owned and To Be Sold
[Enlarge/Download Table]
Date Shares Owned & Percent Consideration
# Purchased Name and Address of Owner Shares Being Sold of Class Paid
========= ========================= ================= ======== ====
1 11/19/99 Scott Rhodes 1000 0.04% $1.00 Focus
The Grand Financial
5801 Nicholson Lane #810
North Bethesda, MD 20852
2 11/19/99 Dr Samuel Kaufman 1000 0.04% $1.00 Focus
1536 SW Fifth Avenue Financial
Boca Raton, FL 33432
3 11/19/99 Herbert Bryant, III 1000 0.04% $1.00 Focus
8390 Currency Dr. #5 Financial
West Palm Beach, FL 33404
4 11/19/99 Dr. Warren Sturman 1000 0.04% $1.00 Focus
801 Ponce de Leon Dr. Financial
Ft. Lauderdale, FL 33316
5 11/19/99 Ron & Lisa Kauffman 1000 0.04% $1.00 Focus
18846 SE Old Trail Dr. W Financial
Jupiter, FL 33478-1818
6 11/19/99 Cramer, Daniel 1000 0.04% $250.00 Focus
15500 46th Lane South Financial
Wellington, FL 99414
7 11/19/99 Cramer, Sandy 1000 0.04% $250.00 Focus
15500 46th Lane South Financial
Wellington, FL 99414
8 11/19/99 Diaz, Roxanne 1000 0.04% $250.00 Focus
31 Truman Financial
Ft. Lauderdale, FL 33326
9 11/19/99 Echols, Stephen 1000 0.04% $250.00 Focus
160 Marine Way Financial
Delray Beach, FL
10 11/19/99 Foote, Laura 1000 0.04% $250.00 Focus
123 Beach Rd. Financial
Islamorada, FL 33036
c/o The Moorings
11 11/19/99 Ghanam, Jay 1000 0.04% $250.00 Focus
425 N Dixie Hwy Financial
Pompano Beach, FL 33060
12 11/19/99 Gundlach, Jon 1000 0.04% $225.00 Focus
2741 NE 14th St. Financial
Ft. Lauderdale, FL 33304
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13 11/19/99 Hanrahan, Robert 1000 0.04% $250.00 Focus
2175 Citrus Lake Dr. # B201 Financial
Naples, FL 34109
14 11/19/99 Milligan, Sharon 1000 0.04% $250.00 Focus
9539 Boca Cove Circle #109 Financial
Boca Raton, FL 33428
15 11/19/99 Palos, Diane 1000 0.04% $250.00 Focus
330 SE 2nd Ave #C1 Financial
Deerfield Beach, FL 33441
16 11/19/99 Prendergast, Alicia 1000 0.04% $250.00 Focus
1907 Lincoln Way Financial
San Francisco, CA 94112
17 11/19/99 Reynolds, Nancy 1000 0.04% $2.00 Focus
3237 NE 10th St #2 Financial
Pompano Beach, FL 33062
18 11/19/99 Ring, Stephanie 1000 0.04% $250.00 Focus
4890 NW 85th Ave Financial
Lauderhill, FL 33351
19 11/19/99 Schiff, Martha 1000 0.04% $250.00 Focus
534 Hendricks Isle Financial
Ft. Lauderdale, FL
20 11/19/99 Snow, Judith 1000 0.04% $250.00 Focus
4901 NE 13th Ave. Financial
Oakland Park, FL 33334
21 11/19/99 Toohey, Richard 1000 0.04% $250.00 Focus
PO Box 3411 Financial
Palm Beach, FL 33480
22 11/19/99 Woodford, Allison 1000 0.04% $250.00 Focus
1021 N 12th Terrace Financial
Hollywood, FL 33019
23 11/19/99 Gitman, Jacob 1000 0.04% $1.00 Focus
1111 Kane Concourse, Suite 518 Financial
Bay Harbour Islands, FL 33154
24 11/19/99 Sharon Baker 1000 0.04% $1.00 Focus
104 Half Moon Circle, Suite H-3 Financial
Hypoluxo, FL 33462
25 11/19/99 King, Sean 123,000 4.92% Services Focus
1780 Palm Cove Blvd. #205 Financial
Delray Beach, FL 33445
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26 11/19/99 Mark Kallan 1000 0.04% $1.00 Focus
19999 Back Nine Drive Financial
Boca Raton, Fl 33498
27 11/19/99 Goldstein, Shelley *** 137,000 5.48% Services Focus
22154 Martella Ave Financial
Boca Raton, FL 33433
28 11/19/99 Callanan, Brian 1000 0.04% $1.00 Focus
7340 S.W. SW 5th Street Financial
Plantation, FL 33317
29 11/19/99 Gerry Breslauer 1000 0.04% $1.00 Focus
11453 Ohanu Circle Financial
Boynton Beach, FL 33437
30 11/19/99 Charles Simmons 1000 0.04% $1.00 Focus
P.O. Box 3886 Financial
Houston, Texas 77253
31 11/19/99 Cohen, Lisa 1000 0.04% $1.00 Focus
124 Bright Street Financial
Belmont, Mass 02178
32 11/19/99 Bleiberg, Erika 1000 0.04% $1.00 Focus
76 Willow Street Financial
Glen Ridge, N.J. 07028
33 11/19/99 Michael Frank 1000 0.04% $1.00 Focus
5227 Sapphire Valley Financial
Boca Raton, Fl 33486
34 11/19/99 Goldstein, Alvin 1000 0.04% $1.00 Focus
244 13th Street NE, # 209 Financial
Atlanta, GA 30309
35 11/19/99 Simmons, Charles S. 1000 0.04% $1.00 Focus
P.O. Box 160234 Financial
Austin, TX 78716
36 11/19/99 Brockman, Mindy 1000 0.04% $1.00 Focus
5780 H Coach House Circle Financial
Boca Raton, FL 33486
37 11/19/99 Irv Bowen 1000 0.04% $1.00 Focus
333 Sunset #407 Financial
Fort Lauderdale, FL 33301
38 11/19/99 Goldstein, Inge 1000 0.04% $1.00 Focus
2 King Fisher Road Financial
North Eastham, Mass
39 11/19/99 Charlotte Guiberson 1000 0.04% $1.00 Focus
8420 Halliford Court Financial
Plano, Texas 75024
40 11/19/99 Steve Bludsworth 1000 0.04% $1.00 Focus
4266 Coronado Road Financial
Orlando, FL 32804
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41 11/19/99 Goldco Properties Ltd. 100,000 0.04% Services Focus
Partnership*** Financial
22154 Martella Avenue
Boca Raton, FL 33433
42 11/19/99 Ron Lichtman 1000 0.04% $1.00 Focus
141 NW 20th Street Suite G103 Financial
Boca Raton, Florida 33431
43 11/19/99 Peter Goldstein *** 1000 0.04% $1.00 Focus
22154 Martella Ave Financial
Boca Raton, FL 33433
Total 500,000 20% $4,000.00 Focus
Financial
***Shelley Goldstein Beneficial ownership(2) 238,000 9.52%
(1) Assumes sale of all shares offered by the selling shareholder.
(2)Beneficial ownership is determined in compliance with the rules of the SEC
and generally includes voting or investment power with respect to securities.
Assuming that all the other shares registered hereby are issued, the total
outstanding shares as of June 30, 2001, with no other shares issued, would be
3,500,000. In such event, Richard L. Loehr's ownership of 2,000,000 shares would
represent 57.143% of our total voting shares.
SHARES ELIGIBLE FOR FUTURE SALE
As of October 1, 2001 there are no shares of Common Stock currently issued and
outstanding which are freely tradeable without restrictions under the Securities
Act.
In general, under Rule 144 as currently in effect, any of our affiliates and any
person (or persons whose sales are aggregated) who has beneficially owned his or
her restricted shares for at least one year, is entitled to sell in the open
market within any three-month period a number of shares of common stock that
does not exceed the greater of (i) 1% of our then outstanding shares of common
stock, or (ii) the average weekly trading volume in our common stock during the
four calendar weeks preceding such sale. Sales under Rule 144 also are subject
to certain limitations on manner of sale, notice requirements, and the
availability of current public information about us. Our non-affiliates who have
held their restricted shares for two years are entitled to sell their shares
under Rule 144 without regard to any of the above limitations, provided they
have not been affiliates for the three months preceding such sale.
22
Shares held by shareholders who were promoters or affiliates of the blank check
company even after a merger with us, may not be sold in reliance on Rule 144.
We are not quoted on the OTCBB. Following this offering, no predictions can be
made of the effect, if any, of future public sales of restricted securities or
the availability of restricted securities for sale in the public market.
Moreover, we cannot predict the number of shares of our common stock that may be
sold in the future pursuant to Rule 144 because such sales will depend on, among
other factors, the market price of our common stock and the individual
circumstances of the holders thereof. The availability for sale of substantial
amounts of our common stock under Rule 144 could adversely affect prevailing
market prices for our securities.
PLAN OF DISTRIBUTION
The Selling Shareholders may effect the distribution of the shares in one or
more transactions that may take place through block trades or ordinary broker's
transactions, or through privately negotiated transactions, an underwritten
offering, or a combination of any such methods of sale. Sales of shares will be
made at market prices prevailing at the time of sale or at negotiated prices.
Selling Shareholders may pay usual and customary or specifically negotiated
brokerage fees or commissions in connection such sales. We have agreed to pay
registration expenses incurred in connection with this registration.
The aggregate proceeds to the Selling Shareholders from the sale of the shares
will be the purchase price of our common stock sold less the aggregate agents'
commissions and underwriters' discounts, if any. The Selling Shareholders and
any dealers or agents that participate in the distribution of the shares may be
deemed to be "underwriters" within the meaning of the Securities Act of 1933
(the "Act"), and any profit from the sale of shares by them and any commissions
received by any such dealers or agents might be deemed to be underwriting
discounts and commissions under the Act.
Under the Securities Exchange Act of 1934, as amended, and the regulations
thereunder, any person engaged in a distribution of the shares of our common
stock offered by this prospectus may not simultaneously engage in market making
activities with respect to our common stock during the applicable "cooling off"
periods prior to the commencement of such distribution. Also, the selling
security holders are subject to applicable provisions which limit the timing of
purchases and sales of our common stock by the selling security holders.
We have informed security holders that, during such time as they may be engaged
in a distribution of any of shares we are registering by this registration
statement, they are required to comply with Regulation M. In general, Regulation
M precludes any selling security holder, any affiliated purchasers and any
broker-dealer or any other person who participates in a distribution from
bidding for or purchasing, or attempting to induce any person to bid for or
purchase, any security which is the subject of the distribution until the entire
distribution is complete. Regulation M defines a "distribution" as an offering
of securities that is distinguished from ordinary trading efforts and selling
methods. Regulation M also defines a "distribution participant" as an
underwriter, prospective underwriter, broker, dealer, or other person who has
agreed to participate or who is participating in a distribution.
23
Regulation M prohibits any bids or purchases made in order to stabilize the
price of a security in connection with the distribution of the security, except
as specifically permitted by Rule 104 of Regulation M. These stabilizing
transactions may cause the price of our common stock to be more than it would
otherwise be in the absence of these transactions. We have informed the selling
security holders that stabilizing transactions permitted by Regulation M allow
bids to purchase our common stock if the stabilizing bids do not exceed a
specified maximum. Regulation M specifically prohibits stabilizing that is the
result of fraudulent, manipulative, or deceptive practices. Selling security
holders and distribution participants are required to consult with their own
legal counsel to ensure compliance with Regulation M.
In order to comply with the securities laws of certain states, if applicable,
the securities may be sold only through registered or licensed brokers or
dealers. In addition, in certain states, the securities may not be sold unless
they have been registered or qualified for sale in such state or any exemption
from such registration or qualification requirement is available and the sale is
made in compliance with the requirements.
We have agreed to indemnify the Selling Shareholders in certain circumstances,
against certain liabilities arising under the Act. The Selling Shareholders have
agreed to indemnify Nationwide and our directors and officers who sign the
registration statement against certain liabilities, including liabilities
arising under the Act.
LEGAL PROCEEDINGS
We have the following outstanding legal proceedings:
(1) Gary W. Morris v. Nationwide Companies, Inc., William R. Case, Richard L.
Loehr and Glenville Haldi - State Court of Fulton County, State of Georgia,
Civil Action No. 00-VS-001060 C: We are being sued by Gary W. Morris, a
California resident, in Fulton County, Georgia. William R. Case, Richard L.
Loehr, our Chairman and Chief Executive Officer, and Glenville Haldi are also
name as defendants in the lawsuit. Mr. Morris' allegations include fraudulent
conveyance, fraud and conspiracy. He seeks to recover a $122,038 judgment
awarded him in 1999 in an action he brought against Nationwide Auto Club, Inc.
at the end of 1997. Mr. Morris alleges that Mr. Case, Mr. Loehr, Mr. Haldi and
Nationwide Companies were involved in a conspiracy to defraud Mr. Morris and to
render his judgment worthless by transferring the assets of Nationwide Auto
Club, Inc. to another entity (specifically Nationwide Companies, Inc., our legal
entity). Mr. Morris alleges that mr. Case, Mr. Loehr and mr. Haldi did not
disclose, and kept from him, the existence of Nationwide Companies, Inc. and of
the transfer of assets. The parties are mediating this lawsuit voluntarily on
October 25, 2001. If mediation is unsuccessful, the parties will proceed to
trial.
24
(2) Nationwide Mutual Insurance Company, et al.v. Nationwide Insurance Group,
Inc., et al., Case No. C2-01-785, pending in the United District COurt, Southern
District of Ohio. This is a case brought by Nationwide Insurance against us for
alleged trademark infringement. Nationwide Insurance is requesting that we cease
and desist from using the name "Nationwide," or any derivative thereof, in
connection with insurance or financial services. At this time, we are
negotiating a settlement where we will cease using names, in connection with the
sale of insurance or financial services, which may infringe on the Nationwide
trademark with regard to our insurance and financial services. We have already
substantially ceased the use of such names and, in fact, took up such efforts
within forty eight (48) hours of the first notice of objection. We have also
tentatively agreed to pay $5,000 for the grant of a license to continue to use
"Teamnationwide" as a link to our other domains for a limited period. We have
not entered into the Settlement Agreement at this time, but both parties are
expected to sign this Agreement within the next few weeks.
Except as stated above, as of October 15, 2001, there have not been any material
civil, administrative or criminal proceedings concluded, pending or on appeal
against us.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Directors and Executive Officers
The members of the Board of Directors of Nationwide serve until the next annual
meeting of stockholders, or until their successors have been elected. The
officers serve at the pleasure of the Board of Directors. The directors and
executive officers of Nationwide, their ages and positions held as of the date
of this Prospectus are set forth below:
NAME AGE POSITION(S) HELD
Richard Loehr 58 Chairman and Chief Executive Officer
Douglas J. Borr 58 Vice President
Lynda M. Davis 46 Vice President and Secretary
Carol Boozer 47 Vice President & Treasurer
Angela Loehr Chrysler 29 Director
Richard Chrysler 59 Director
Robert Fason 42 Director
Les Whitaker 42 Director
Richard Loehr, Chairman and Chief Executive Officer
Richard (Dick) Loehr has been our Chairman and Chief Executive Officer since
December 28, 2000 when we merged with Focus Financial Group, Inc. Mr. Loehr was
the principal officer, director and shareholder of Focus Financial Group from
its inception. His responsibilities include our day-to-day operations. Mr. Loehr
designed our Benefits Program.
25
Mr. Loehr was semi-retired and managed his investments from July of 1990 until
January of 1997 when he developed Nations Fleet and Leasing, Inc., Loehr's Auto
Consulting, Inc., and Nationwide Automotive Group, Inc. We were formed by Mr.
Loehr on January 15, 1999.
Following his career at Ford Motor Company, Mr. Loehr remained in the automobile
industry as the owner of automobile dealerships in Michigan from 1970 to 1990.
While the owner of a Chrysler dealership, Mr. Lee Iococca, assigned Mr. Loehr to
direct the fund raising campaign to restore the Statue of Liberty.
Dick Loehr's career began while a teenager at Ford Motor Company in Detroit,
Michigan in 1961. At Ford, Mr. Loehr spent a much of his time as the head of the
Ford Racing Team.
Douglas J. Borr, Vice President
Douglas J. Borr has served as our Vice President with responsibility for
developing our multi-dimensional benefits packages since January 1999. Mr. Borr
originally joined us in January of 1999 to assist Mr. Loehr in the formation
Nations Auto Fleet, Inc. and subsequently the development of our entire benefits
packages.
From 1994 to January 1999 Mr. Borr enjoyed managing his investments and
semi-retirement.
From 1989 to 1991, Mr. Borr enjoyed semi-retirement. In 1991, he purchased a
manufacturing plant, becoming president and chairman. He sold this business in
1994.
From 1970 until 1983 Mr. Borr began his career as a salesman in one of Mr.
Loehr's automobile dealerships where he subsequently became general manager. In
1983 Mr. Borr resigned form the Loehr's dealerships to purchase his own AMC Jeep
dealership in Grand Rapids, Michigan. He sold the dealership in 1988.
Lynda M. Davis, Vice President and Secretary
Lynda Davis joined us in July of 1996 assisting Mr. Loehr in forming Nationwide
Automotive Group, Inc. She subsequently accepted the position as our Vice
President and Corporate Secretary in January 1999.
From 1989 to 1995, prior to joining us, Ms. Davis worked at the American
Airlines International Division where she was a head flight attendant. Ms. Davis
retired from American Airlines in 1995.
26
From 1977 to 1989, prior to joining American Airlines International Division,
Ms. Davis worked with Eastern Airlines as a Senior Flight Attendant, responsible
for training and coordination of crews.
From 1974 to 1977, Ms. Davis worked with Continental Homes of Chicago as
Subdivision Sales manager.
Carol Boozer, Vice President/Treasurer
Carol Boozer has served as our Vice President and Treasurer as of January 1999.
Ms. Boozer joined us in July of 1996 to assist Mr. Loehr in the formation of
Nations Fleet, an affiliated company. She is responsible for our financial
bookkeeping and reporting. Ms. Boozer reports directly to our Chief Executive
Officer.
Prior to joining us, Ms. Boozer was the office manager for King Toyota through
July 1996.
Ms. Boozer relocated to South Florida in 1991 and managed a chain of Fast Food
Franchises until 1995.
Prior to relocating to South Florida Ms. Boozer lived in Michigan, where she was
hired by Richard Loehr as billing clerk and later office manager at one of his
dealerships. After Mr. Loehr sold his dealerships, Ms. Boozer remained with the
new owner until 1991.
Angela Loehr Chrysler, Director
Angela Loehr Chrysler has been our Director since December 28, 2000. Ms.
Chrysler joined us in September 2000 as Vice President of Nationwide Travel
Services, Inc. (a UNIGLOBE Team Travel franchise and our newest affiliated
company). Ms. Chrysler, is the daughter of Mr. Richard Loehr. Ms. Chrysler's
responsibilities include all aspects of running a travel business: sales,
management, finance, Web maintenance and training.
Prior to joining us, Ms. Chrysler, from January 2000 until September 2000, was
the regional physician sales representative for Healtheon/WebMD, an Internet
health services and information company headquartered in Atlanta, Georgia. Ms.
Chrysler's responsibilities included in-service training for nurses and staff in
the use of the WebMD Web site and its services. Her territory included
approximately five counties in Michigan with over 6,000 accounts. Ms. Chrysler
left WebMD to help found Nationwide Travel Services.
From September 1996 until December 2000, Ms. Chrysler was involved in medical
sales. She was initially a territorial sales representative for RHEIN Medical,
an ophthalmic instrument company with responsibility for managing approximately
300 accounts. She subsequently became an independent representative for
Midwestern STAAR in Cincinnati, Ohio.
27
Ms. Chrysler began her professional career in 1994 as a sales administrator for
L&W Engineering, an automotive engineering company.
Ms. Chrysler holds a Bachelor of Science degree from Florida Atlantic
University.
Dick Chrysler, Director
Dick Chrysler has been our Director since December 28, 2000 and has been the
President of The Ideal Group, a minority owned steel company, since April 2000
to the present. Mr. Chrysler is Ms. Chrysler's father-in-law.
In November 1998 until April 2000, Mr. Chrysler was the President of John
Saratokis Enterprises which is now known as ASCET.
Prior to joining ASCET, Mr. Chrysler was the President of Richard Chrysler, Inc.
from January 1997 until November 1998.
Mr. Chrysler was elected to the United States House of Representatives in 1994
and served in that capacity until January 1997.
Mr. Chrysler is a member of the board of directors of the Michigan National
Bank, and Vice Chairman of Cleary College.
Robert Fason, Director
Robert Fason has been our Director since December 28, 2000. Mr. Fason joined us
in 1999 following a six-year career with National Safety Associates (NSA),
including membership on Nationwide's President's Advisory Council and Executive
Committee. For ten years, prior to joining NSA Mr. Fason was a dairy farmer in
Mount Vernon, Arkansas.
Les Whitaker, Director
Les Whitaker has been our IMD since July 31, 1998, as well as a regional
director and member of our Chairman's Circle. From 1982 until 1997, Mr. Whitaker
was a Registered Professional Engineer with the State of Oklahoma. Mr. Whitaker
has been a Nationwide Director as of December 28, 2000. From 1982 until 1993,
Mr. Whitaker was a direct marketing distributor for Amway n/k/a Alticor. He was
a National Sales Director for Jewelway's International from 1996 until he joined
The Nationwide Companies as an Associate.
Mr. Whitaker holds a Bachelor of Science degree and a Master's degree in Civil
Engineering from Oklahoma State University.
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PRINCIPAL SHAREHOLDERS
The following table summarizes certain information with respect to the
beneficial ownership of our shares, immediately prior to and after this
offering. The following table sets forth information as of October 15, 2001,
regarding the ownership of common stock by each shareholder known to be the
owner of more than 5% of the outstanding shares, each director and all executive
officers and directors as a group. Except as otherwise indicated, each of the
shareholders has sole voting and investment power with respect to the shares of
our common stock beneficially owned. As of October 15, 2001, there were
2,500,000 shares of our common stock outstanding. The percentage of beneficial
ownership calculation below is based upon the 2,500,000 shares that currently
are entitled to vote on all shareholder issues.
[Enlarge/Download Table]
After the Offering
Prior to Offering (1) Minimum(2) Maximum(3)
--------------------- ---------- ----------
Name of Beneficial Owner: Number % Number % Number %
------------------ ----------------- --------------------
Richard L. Loehr (4) 2,000,000 80.00% 2,000,000 76.92% 2,000,000 57.14%
Shelley Goldstein(5) 238,000(5) 9.52 0(6) 0 0(6) 0
Peter Goldstein(5) 238,000(5) 9.52% 0(6) 0 0(6) 0
All Directors, Officers and 5%
Shareholders as a Group 2,238,000 89.52% 2,000,000 76.92% 2,000,000 57.14%
All Beneficial Owners as a Group 2,800,000 89.52% 2,000,000 76.92% 2,000,000 57.14%
========= ====== ========= ====== ========= ======
(1)Reflects total outstanding shares of 2,500,000 as of October 15, 2001;
(2)Assumes issuance and sale of 100,000 of our shares during this Offering
Period (the "minimum" offering) in addition to the 2,500,000 shares outstanding
as of October 15, 2001, an aggregate 2,600,000 Shares; (3)Assumes issuance and
sale of 1,000,000 of our shares during this Offering Period (the "maximum"
offering) in addition to the 2,500,000 shares outstanding as of October 15,
2001, an aggregate 3,500,000 shares; (4)Our Chairman and Chief Executive
Officer; (5)Shelley Goldstein is our former sole executive and director. Mrs.
Goldstein and her husband, Peter Goldstein, are the controlling shareholders of
Goldco Properties, Ltd which owns 100,000 shares and Mr. Goldstein owns directly
1,000 shares. Combined with Ms. Goldstein's direct ownership interest, Shelley
Goldstein and Peter Goldstein beneficially own, as determined in compliance with
SEC rules, 238,000 shares; (6)Assumes the sale of all shares offered by the
selling shareholder.
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ABOUT US
National Companies, Inc., formerly known as The Nationwide Companies, Inc. and
formerly known as Focus Financial Group, Inc. was incorporated under the laws of
the State of Florida on November 18, 1999. We commenced operations as a
developmental stage company and had no revenues from inception until
consummating our merger with Team Nationwide, Inc., a Florida corporation, on
January 8, 2001 which merger had a December 28, 2000, effective date. Until this
merger our activities had been limited to actions related to our organization.
For the calendar year 2000 we operated as a "shell" company conducting virtually
no business operations, other than our efforts to seek a merger partner or
acquisition candidate. Until our merger we had no full time employees and owned
no real estate. The Nationwide Companies, Inc. now operates as a direct sales
company.
On January 8, 2001, Focus Financial Group, Inc. n/k/a The Nationwide Companies,
Inc., a Florida corporation (the "Nationwide"), and The Nationwide Companies,
Inc. n/k/a Team Nationwide, Inc., a Florida corporation, and the individual
holders of all of the outstanding capital stock of The Nationwide Companies,
Inc. (the "Holders") consummated a reverse acquisition (the "Reorganization")
pursuant to a certain Share Exchange Agreement ("Agreement") of such date with
an effective date of December 28, 2000. Prior to the Agreement Nationwide's sole
officer and director cancelled 300,000 shares of common stock in her name and
returned them to Nationwide's Treasury. Total issued and outstanding stock
immediately prior to effecting the Agreement was 500,000. Pursuant to the
Agreement, the Holders tendered to Nationwide all issued and outstanding shares
of common stock of The Nationwide Companies, Inc. in exchange for 2,000,000
shares of Common Stock of Nationwide. Total issued and outstanding stock after
effecting the Share Exchange Agreement is 2,500,000. We also announced
simultaneously with the closing of the Agreement the approval of an amendment to
our Articles of Incorporation changing our name from Focus Financial Group, Inc.
to The Nationwide Companies, Inc. The reorganization is being accounted for as a
reverse acquisition.
Simultaneously with the closing of the Reorganization, our then officer and
director tendered her resignation in accordance with the terms of the Agreement.
Prior thereto, Richard L. Loehr was appointed to serve on the Board of Directors
of Nationwide (the "Board"). The Board subsequently appointed Richard L. Loehr,
Chief Executive Officer and President, Lynda M. Davis, Vice-President and
Secretary, Douglas Borr, Vice-President and Carol Boozer, Vice- President and
Treasurer.
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The principal business reason for merging with Focus Financial Group, Inc. was
to make a more expeditious and economical transition from a private business
entity to a publicly reporting business entity which will obtain a listing of
our common equity on a public exchange which will provide our present and future
shareholders an opportunity upon the Public Registration of our common equity
shares to accumulate a quantifiable and marketable equity ownership interest in
us. The ultimate goal of such a business decision is the ability to provide an
opportunity for an equity ownership interest to our present and future
shareholders and to promote loyalty through the establishment of equity vesting
schedules that will attach to future employee incentive stock ownership plans. A
secondary but no less important business reason for merging with Focus Financial
Group, Inc. is to provide our employees and Independent Marketing Directors
("IMD") with a means whereby they can be rewarded for their contributions to
Nationwide's profitability through the potential establishment of a stock option
plan which will reserve common stock shares for their benefit which shares will
be subject to vesting schedules and become in time capable of being sold on a
public exchange and receive a free market valuation. An additional business
reason for merging with Focus Financial Group, Inc. is to provide Nationwide's
security holders an opportunity to buy and sell Nationwide's common stock over a
public stock exchange in the future.
In General
We now operate as a direct sales company. We sell a range of benefit packages
through Independent Marketing Directors.
Our Core Business
Direct selling is one of the most effective marketing strategies in the world.
Powered by personal relationships, lucrative financial incentives and time
freedom, direct sales companies are driven by highly consumable, quality
products. Direct sales organizations traditionally have the ability to grow at
rates faster than seen in most other industries.
Direct sales is a powerful and persuasive way to introduce products, generating
strong "word of mouth" validation by directly rewarding consumers for sharing
their excitement about a company's products or services. The industry supports
above average profit margins due to this value-added personal interaction.
We are a direct sales and distribution organization. Our unique ability to
aggregate services and products enables us to offer discounts through the power
of group buying. Our benefits offer a wide variety of products and services. We
have developed our marketing system based on the one-to-one marketing concept of
direct selling, creating value for us and significant revenue for our IMDs.
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We have developed an affiliation with the following four companies to satisfy
market demand from our associates for products and services for which it did not
have a suitable provider:
- Team National Products, Inc.
- National Health Plans Plus, Inc.
- National Travel Consultants, Inc.
- National Automotive, Inc.
Our benefit packages include automotive discounts, financing, leasing,
mortgages, life and health insurance, travel and vacation packages,
telecommunications and more. Other benefits include an array of
consumer-oriented products and services including car care products, dietary and
nutritional supplements, personal care, jewelry and stained glass.
We only sell benefit packages which provide goods and services provided through
suppliers. Goods and services available through the benefit packages include;
Automobiles, automobile extended warranties, health and life insurance, travel
services, automotive products, fruit and gift products, jewelry, UPS next day
letters, miracle ear hearing aids, eye care, vitamin supplements, cosmetics and
skin care products, mortgage loans and telecommunication long distance services.
If additional products or services are added to the benefits packages they will
be provided by our existing or future suppliers.
We offer two benefit packages:
1. A Three-Year Family Benefit Package for the whole family, including the owner
and spouse, their parents and all children (no age limit). A family package
sells for $2,195. Financing is also available for this package @ $895 down and
$75.95 per month for 20 months, including interest @ 18% per annum.
2. A Two-Year Individual Benefit Package for the owner and spouse, which has the
same benefits as the family package, sells for $795. Financing for this package
includes $95 down and $39.95 per month for 20 months, including interest @ 18%
per annum.
The benefits in each package are identical, the only difference is the number of
people they cover and the duration. Associates may order direct with the
suppliers for the benefits offered. The Individual and Family/Business benefits
packages contain the exact same benefits, they only differ by the cost, the
number of people covered and the term. Both benefit packages offered include:
a. Discount buying power on many domestic vehicles as well as substantial
savings on some commercial vehicles. Buyers receive all manufacturers
rebates and enjoy the convenience of delivery to local dealerships on many
vehicles.
b. Discount buying power on used vehicles
c. Discount buying power on furniture
d. Discount buying power on Jewelry, Diamonds, Gems and Gold
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e. Discount buying power on Skin Care, Nutritional Products, Make Up and
Scents
f. Discount buying power of Car Care products
g. Discount buying power with competitive rates on Health, Dental, and Life
Insurance
h. Competitive rates on Vacations, Cruises, Tours, Hotels, Car rentals and
Airfares.
i. Discounts on Eye Care and Eyeware provided by EyeMed Vision Care
j. Discounts on your telecommunications services; long distance calling,
Internet services, calling cards
k. Discounts on UPS prepaid next day letter shipping labels
1. Discounts on mechanical breakdown policies for new and used vehicles
m. Discounts on engine performance products and vehicle parts.
n. Discounts on Miracle Ear Hearing Systems through Bausch & Lomb
o. Discounts for Online Mortgages
p. Family savings on a Medical and Legal Plan administered by the National
Association of Preferred Providers of Houston, Texas offering prescription
services, air ambulance services, dental services, hearing services,
accident protection, eye care services and legal services
q. Competitive rates on fruit and gift products.
Presently, there are over thirty benefits offered in our benefit packages. All
benefits may not be available in some areas.
As a direct sales organization, we do not engage in manufacturing activities nor
are we an underwriter and/or originating lender for any of our benefits. All
goods and services are derived from an outside source, as a result no goods or
services are created and/or manufactured directly by us. All products and
services are purchased directly from suppliers or by our affiliated companies.
We have no contracts with suppliers other than four companies which are
considered our affiliates. The products and services supplied by these companies
are owned by Richard Loehr, our majority shareholder. Our affiliated companies
presently only sell to our associates, although these affiliated companies are
available to sell products to other individuals and enterprises.
Revenue is realized by us from the sales of benefit packages. We do not pay a
fee for listing any of our supplier's services. In addition, one affiliate,
National Team Products, Inc. pays a commission to us based on product sales. The
commission received by us from this affiliate is reflected in the Statement of
Operations. For each dollar of products sold to an associate of ours, we receive
a commission per product as set forth below. When an associate purchases the
nutritional, car care, La Face skin care, scents and make up, or fruit gift
baskets, a percentage of their purchase is paid to us. The following are the
percentages of each item purchased that is paid to the us by Team National
Products, Inc.:
1. Car care - 20%
2. La Face products - 25%
3. Nutritionals - 55%
4. Fruit Gift Baskets - 10%
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We are in business with four affiliated companies: (1) National Automotive, Inc.
which processes orders for the purchase and delivery of new and used cars, as
well as the mechanical breakdown policies; (2) Team National Products, Inc.
which provides skin care, car care, nutritionals, make up, scents, UPS labels,
EyeMed cards, Miracle Ear cards, fruit and gift baskets; (3) National Health
Plans Plus, Inc. which provides Life, Health and Dental Insurance; and (4)
National Travel Consultants, Inc. which is a full service travel agency.
State Regulatory Departments May Affect Our Business
State departments pertaining to insurance and financial regulation subject our
affiliated companies to regulatory control over their operations which may
impact the manner in which our Independent Marketing Directors' conduct
business. Various state laws and regulations can affect licensure, the payment
of dividends, the establishment of premium rates, the settlement of claims among
other matters which could have a material adverse effect on our operations.
Furthermore, state insurance regulatory authorities have broad powers and are
concerned primarily with the protection of policyholders.
The Nationwide Marketing Plan
We will continue to grow and develop our market share with a marketing plan
focused on our core business, the sale of benefit packages. The marketing
strategy is at the core of our success. We understand that although the benefit
programs and the discounted products and services offered are a key component of
our focus, without the proper marketing and direct sales, these benefits will go
unsold. The points listed below are the constant focus of our management team:
o Emphasis on training and motivation.
o Cultivate and attract both new and strong leaders.
o Promote unique offerings of cost-effective products and services.
o A pay plan that leads the industry.
o Availability and accessibility of executive management.
We are presently researching the outsourcing options for the redesign of our
training manuals and IMD business kits to professional publishing and marketing
firms. Additionally, we are upgrading the quality and format of our present
corporate sales and marketing presentations and anticipate the conclusion of
these efforts within the next twelve months. We have allocated a budget of
$180,000 for this improvement.
Our marketing and sales plan is designed with an emphasis around an easy
duplicatable system for marketing the benefits packages. We have a training and
development program that includes workshops designed to give the basic tools and
understanding of selling and marketing benefit packages. These workshops are
conducted on a daily basis. Advanced workshops are designed to teach short and
long-term goal setting.
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We consider our web site to be a vital sales and marketing tool, therefore we
presently revise and upgrade the site daily. We anticipate that our website will
continue evolve just as we grow and evolve as a company. At this time we can not
quantify each component of our marketing plans.
Independent Marketing Directors
As a direct sales company, sales of our benefit packages are dependent upon the
efforts of our IMDs. Management expects the number of IMDs and associates to
continue to grow as Nationwide expands and as distributor recruitment increases.
IMD growth is an essential component in our continued success in the direct
selling industry. Nationwide believes our compensation plan is one of the most
financially rewarding in the industry. IMD commissions and bonuses are
calculated and paid weekly and monthly based on sales volume as outlined in
Nationwide's pay plan. Commissions are our most significant expense. Management
believes IMD commissions as a percent of net sales will remain relatively
constant.
Our Compensation Plan
The nature of a direct sales company such as ours is a firm that utilizes
independent contractors to market benefit packages sold directly to consumers
and enterprises. We utilize such independent contractors to sell our benefit
packages.
Our independent contractors are titled Independent Marketing Directors, and are
compensated for the sale of our benefit packages. In direct sales individuals
may also be compensated from group efforts. We compensate our Independent
Marketing Directors with commissions and bonuses based on individual and group
efforts.
We offer a "binary" compensation program. In our plan, an IMD is allowed to
occupy one or more "business centers", (Bonus Points and Pay Points) each
limited to two downline legs. Downline legs are subsequent sales from people who
have purchased a benefit package and have applied to become an IMD. Compensation
is paid on group volume of the downline legs rather than a percentage of sales.
Pay points are points received when an IMD sells a benefit package. Bonus points
are additional pay points that are earned by attending our training. Our
compensation program is volume driven, thereby the greater the volume, the
greater the compensation. This allows an IMD to climb a level of achievement for
their efforts, but also from the efforts of their sales group. Sales volume must
meet certain criteria to be eligible for commissions, which are paid at
designated points when target levels of group sales are achieved. Payment is on
a weekly and monthly basis.
We chose a binary compensation structure because of several important advantages
offered by this type of direct sales compensation program. Our compensation plan
is designed to give generous rewards to all levels of participation. Our
generous plan rewards IMDs and generates significant sales for us.
35
Team-national.com
We have designed and maintain a state-of-the-art Internet site,
www.team-national.com. since January 15, 1999. The site has grown quickly and is
an important sales tool for us and our IMDs. Team-national.com is a secure venue
where IMDs can recruit prospects, download training materials and more. An
associate can purchase products and services from the comfort of their own homes
24 hours a day, 7 days a week. We protect visitors to our website by utilizing
encryption, ensuring the security and transmissions of sensitive personal
information and all on-line communications.
Additionally, our Web site is designed to provide our IMDs with sales tools and
information. We do not earn any revenue from the website. Revenue is earned from
the sale of benefits packages. The purchase of goods and services offered on our
website generates revenue to the suppliers of the goods and services which are
available in our benefit packages. All of the products and services offered on
our website generate revenue to the specific supplier of those goods and
services offered by such individual supplier. All of our affiliates offer the
ability to purchase goods and services online, as well as many of our other
independent suppliers.
Goods ordered from the web site are offered at the same rate as the benefits
package. There is no discount for ordering from the web site. Our web site is
for our associates only, and is provided as a value added service for our
associates. Currently the cost of our products and services available for
purchase on the website are available to associates at the same prices as the
benefit package.
The purchases of good and services on our web site generates revenue to our
affiliate companies as well as the following independent companies: Vehicle
Manufacturers, Coastal HiPerformance, Encore (extended service contracts),
Southeastern Gems, UPS, High Point Furniture, Platinum Capital Group, Ez-tel,
Lenscrafters, and Miracle Ear.
Internet Regulatory Efforts May Affect Our Business
In general, existing laws and regulations apply to the Internet. The precise
applicability of these laws and regulations to the Internet is sometimes
uncertain. The vast majority of such laws were adopted prior to the Internet and
do not address the unique issues of the Internet or electronic commerce.
Numerous federal and state government agencies have already demonstrated
significant activity in promoting consumer protection on the Internet. Due to
the increasing use of the Internet as a medium for commerce and communication,
it is possible that new laws and regulations could be passed with respect to the
Internet. These new laws and regulations could cover issues such as user
privacy, freedom of expression, advertising, pricing, content and quality of
products and services, taxation, intellectual property rights and information
security. The adoption of such laws or regulations and the applicability of
existing laws and regulations to the Internet may slow the growth of Internet
use and result in a decline in Nationwide's sales.
36
A number of legislative proposals have been made at the federal, state and local
level, and by foreign governments, that would impose additional taxes on the
sale of goods and services over the Internet, and some states have taken
measures to tax Internet-related activities. Although Congress recently placed a
three-year moratorium on new state and local taxes on Internet access or on
discriminatory taxes on electronic commerce, existing state or local laws were
expressly excepted from this moratorium. Once this moratorium is lifted, some
type of federal and/or state taxes may be imposed upon Internet commerce. Such
legislation or other attempts at regulating commerce over the Internet may
substantially impair growth and, as a result have a negative affect on our
business.
Proprietary Information
Many of our benefits are sold under trade names that are exclusive to us in
order to protect the trade names and prevent them from being used by other
direct sales companies. This strategy provides flexibility in introducing new
benefits and withdrawing benefits from the market, and minimizes capital
investment and product liability exposure. In this regard, our affiliated
product suppliers have obtained trademark protection on diet and nutrition lines
-Vita-"Products" and Thermo(TM) space age care products available through
Nationwide's benefit packages. We do not own or hold any of our own trademarks
or patents.
Management
We have assembled a trustworthy and dedicated management team comprised of
leaders in their respective industries. These skilled individuals are committed
to accomplishing the goals set forth in this business plan. Refer to Part III,
Item 9. Directors, Executive Officers, Promoters and Control Persons for
biographies of our management.
THE INDUSTRY
Our benefit package is positioned at the leading edge of several multibillion
dollar industries -- automotive sales and services, healthcare products and
services, nutritional supplements, personal care products, telecommunications,
travel, life and health insurance and financial services. Nationwide unites
these industries through a direct sales force to provide quality products and
services devoid of high advertising costs and overhead. Nationwide believes it
has both the products and marketing expertise to aggressively capture a
significant share of these growing industries.
Consulting Agreements
We have no outstanding consulting agreements as of the filing of this
registration statement.
37
MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
OVERVIEW
We were founded in 1999 as a direct sales organization. We sell benefit packages
through Independent Marketing Directors. We have developed relationships with
suppliers who supply products and services to our associates located throughout
the United States. We are one of only 147 companies which maintains membership
in the prestigious Direct Selling Association (DSA). Membership in the DSA is
granted only to those companies that demonstrate the highest standards of
business practices consistent with the Association's high ideals.
On December 28, 2000 we acquired a controlling interest in Focus Financial
Group, Inc., a Florida corporation. The acquired company is an SEC
fully-reporting company and has changed its name to The Nationwide Companies,
Inc.
We experienced a significant increase in market awareness and subsequent
revenue. Revenue increased from the sales of Benefit Packages in excess of 209%
in 2000 over 1999 and our net income in 2000 was $528,829 up significantly
compared to a net operating loss in 1999. We expect to experience a period of
growth since we have experienced significant growth from 1999 to 2000 and
currently for the year 2001 we are experiencing additional growth. We also
expect a continued period of growth since we have increased our IMD and
associate base and are offering additional product and service benefits. This
expected growth will require us to increase the scale of our operations,
including the hiring of additional personnel and expanding the office space
which will contribute to higher operating expenses. Expansion of Nationwide's
operations may cause a strain on its management and other resources.
Nationwide's ability to manage recent and any possible future growth, should it
occur, will depend upon an expansion of accounting and other internal management
systems and the implementation of a variety of systems, procedures and controls.
Our powerful Benefits Package continues to save its associates thousands of
dollars on products and services they're already using. Included in the package
are savings on: Life and Health Insurance, Overnight Shipping, Extended Service
Contracts, fruit and gift products, Thermo Car Care products, Vita product
personal care line, Vehicle Leasing and Purchasing and Travel Services.
Our benefits packages are based on the concept of group buying power, allowing
us to provide savings to our associates on purchases of the goods and services
available in the benefits packages, for example:
-Automobile industry:
An associate can order a 2002 Ford Taurus for $600 below factory to dealer
invoice;
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-Telecommunications:
An associate can obtain a rate of 4.9 cents per minute on long distance calling,
24 hours per day seven days per week as compared to the average market rate of 7
cents.
-Shipping
charges: Prepaid UPS shipping labels are available to our associates at a cost
of $12.50 while the market average is $15.00.
12 Month Plan of Operations
Over the next twelve (12) months, we will focus on increasing the number of
Independent Marketing Directors and Associates located throughout the United
States. We will continue to grow and develop our market share with a marketing
plan focused on our core business, the sale of benefit packages. The marketing
strategy is at the core of our success. We understand that although the benefit
programs and the discounted products and services offered are a key component of
our focus, without the proper marketing and direct sales, these benefits will go
unsold. The constant focus of our management team will include (i)an emphasis on
training and motivation, (ii) cultivating and attracting both new and strong
leaders, (iii)promoting unique offerings of cost-effective products and
services, as well as (iv) making executive management available and accessible.
We have adopted internet technology enthusiastically and maintains an internet
site as a means of communication and ordering for our associates. It is
committed to not losing site of the fact that our products, services and
independent sales force are our hallmarks.
We have adopted an operational strategy to form relationships with multiple
business partners. As a direct sales and distribution organization, we do not
engage in manufacturing activities nor is it an underwriter and/or originating
lender for any of its products or services. All products and services are
purchased directly from suppliers or from our affiliated companies. In this
manner it has a high level of control of the supply chain. These suppliers and
affiliated companies will further reduce our risk, capital investment, need for
facilities and direct responsibility for employees and will provide the
necessary resources and business practices.
We plan to identify and develop relationships with suppliers that can enable us
to provide Internet mortgage and automobile financing. We have present supplier
relationships with United Parcel Service (UPS(TM)), Uniglobe Team Travel,
Miracle Ear(R), Southeastern Gems, Gold and Diamonds, name brand furniture,
major insurance underwriters and more.
We plan to increase our number of Independent Marketing Directors and Associates
during the normal course of business that includes training, promotion and
marketing efforts of existing Independent Marketing Directors. Additionally, we
plan to improve our sales and marketing materials and have allocated a budget of
$180,000 towards this plan for the next twelve months.
39
We plan to add additional services, product lines and suppliers in the future
that will be included in our benefits packages. Each quarter we intend on
strengthening our benefits packages by working with our suppliers and searching
for new relationships to enhance and expand our value to our associates.
We will continue to pursue additional products and services as well as new
suppliers. At this time we are unable to quantify expenses pertaining to our
research and development plans.
Results of Operations - Full Calendar year 2000
Revenues
To date, benefit packages of our IMD's have accounted for substantially all of
our revenues. The revenue is recognized evenly over the life of the benefit
package. Accordingly, the prepaid commissions are amortized evenly over the same
life. This is in compliance with SEC Staff Accounting Bulletin 101. Nationwide
believes that the main focus of its revenue came from the innovative marketing
of its benefit packages offering diversified products and services.
For the calendar year ending December 31, 2000, we on a consolidated audited
basis derived approximately 96% of our revenue from Benefit Package Sales. Our
ability to achieve revenues in the future will depend in significant part upon
its ability to maintain relationships with and provide support to, existing and
new associates. There can be no assurance that our revenues will increase in the
future. Accordingly, our ability to maintain or increase revenues will depend in
part upon our ability to market our benefit packages and to introduce new
benefits at reduced prices sufficient to create savings for our associates in
the average selling price of the affiliated company's products.
Recent Financial Results
Calendar Year Ending 2000 compared to the period of January 15, 1999(Inception)
to December 31, 1999
Revenues for the calendar year ending December 31, 2000 were $6,392,752. This
represents an increase of 209% as compared to revenues of $2,065,549 for the
period January 15, 1999 (inception) to December 31, 1999. Income from operations
for the calendar year 2000 was $528,829 as compared to a loss from operations
for the period January 15, 1999 (inception) to December 31, 1999 of $1,084,705.
Net income for the calendar year 2000 was $528,829, or $0.21 per share on a
basic basis and a diluted basis. By comparison, net loss for the period January
15, 1999 (inception) to December 31, 1999 was $1,084,705, or $0.43 loss per
share on a basic and diluted basis.
Direct Costs. Direct Costs of services increased by $3,214,355, or 210%, from
$1,528,417 in the period January 15, 1999 (inception) to December 31, 1999 to
$4,742,772 in calendar year 2000. As a percentage of revenues, Direct Costs
increased from 74% in 1999 to 77% in calendar year 2000. The increase as a
percentage of revenues was due primarily to the fact that Nationwide's
relationship to revenue to direct costs varies based on the binary system of
compensation. As revenue grows commission paid out may vary based on the binary
pay system. During times of increased revenue, there are new IMD generating
revenue, that may have not yet satisfied the commission requirements. Therefore
the variance of revenue in comparison to direct costs of commissions has a
direct relationship to the number of new IMD and benefit package sales.
40
Selling, General and Administrative. Selling, general and administrative
expenses decreased by $500,686, or 31%, from $1,621,837 in the period January
15, 1999 (inception) to December 31, 1999 to $1,121,151 in calendar year 2000.
As a percentage of revenues, selling, general and administrative expenses
decreased from 79% in the period January 15, 1999 (inception) to December 31,
1999 to 18% in calendar year 2000. General and administrative expenses decreased
as a percentage of revenues primarily because we decreased our administrative
and labor costs. In addition, the dollar decrease in general and administrative
expenses was caused in part by Nationwide better utilizing existing space and
systems.
Provision for Income Taxes. The provision for income taxes increased from $0 in
calendar year 1999 to $ 0 in calendar year 2000. The provision for calendar year
2000 consists of $ 0 for current year operations.
Liquidity and Capital Resources
Our operating activities used cash of $158,310 from January 15, 1999 (inception)
to December 31, 1999, whereas in calendar year 2000, our operating activities
provided cash of $1,027,375. In the period January 15, 1999 (inception) to
December 31, 1999, cash from operating activities was used for the net loss for
the period. In calendar year 2000, cash from operating activities resulted
primarily from net income of $528,829 and an increase in revenue received in
advance from prepaid commissions, accounts payable and accrued expenses of
$474,546.
Cash used in investing activities was $11,399 in the period January 15, 1999
(inception) to December 31, 1999, and $454,235 in calendar year 2000. The
increased use of cash for investing activities in calendar year 2000 as compared
to the period January 15, 1999 (inception) to December 31, 1999 resulted
primarily from our advance to an affiliate.
Our financing activities provided cash of $169,702 in the period January 15,
1999 (inception) to December 31, 1999. A principal source of cash for financing
activities in those years was a cash overdraft and a loan from a stockholder
which totaled $165,709. In calendar year 2000, our financing activities used
cash of $185,027. This consisted primarily of $190,709 to purchase the public
reporting shell corporation and cash overhead.
As of December 31, 2000, we had cash of $388,113 and Total Current Assets of
$4,773,782 and Total Current Liabilities of $5,154,034.
We believe that our existing cash balances will be sufficient to meet our
working capital and capital expenditure requirements for the next 12 months and
for the foreseeable future thereafter.
To date, inflation has not had a material impact on our financial results.
However, inflation may adversely affect our future financial results.
41
Results of Operations -For the Six Months Ending June 30, 2001
Revenues for the six months ending June 30, 2001 were $3,422,473. This
represents an increase of $2,476,417 or 261% as compared to revenues of $946,056
for the six months ending June 30, 2000. Our Net Loss from operations for the
six months ending June 30, 2001 was ($63,417) as compared to a loss from
operations for the six months ending June 30, 2000 of ($283,473). By comparison,
net loss per share on a basic and diluted basis for the six months ending June
30, 2001 was ($0.025) verses ($0.113) for the six months ending June 30, 2000.
Direct Costs. Direct Costs increased from $661,701 in the six months ending June
30, 2000 to $2,430,840 for the six months ending June 30, 2001. As a percentage
of revenues, Direct Costs decreased from 77.90% for the six months ending June
30, 2000 to 76.52% for the six months ending June 30, 2001. The decrease as a
percentage of revenues was due primarily to the fact that Nationwide's revenue
to direct costs increased substantially in the six months ending June 30, 2001.
Selling, General and Administrative. Selling, general and administrative
expenses increased by $527,768, or 193%, from $567,827 in the six months ending
June 30, 2000 to $1,095,595 in the six months ending June 30, 2001. However, as
a percentage of revenues, selling, general and administrative expenses decreased
from 66.85% in the six months ending June 30, 2000 to 34.48% in the six months
ending June 30, 2001. General and administrative expenses decreased as a
percentage of revenues primarily because Nationwide decreased its administrative
and labor costs in addition to increasing substantially its revenues for the six
months ending June 30, 2001. In addition, the dollar decrease in general and
administrative expenses was caused in part by our decision to consolidate our
data processing office and to relocate to our corporate offices in Davie,
Florida to create a higher level of efficiency and utilization of our resources
as well as decrease operating expenses.
Liquidity and Capital Resources
Our operating activities provided cash of $579,030 in the six months ending June
30, 2000, whereas in six months ending June 30, 2001, our operating activities
provided cash of $693,212. In the six months ending June 30, 2001, cash from
operating activities resulted primarily from the our increase in receipt of full
payment for Benefit Packages of $4,696,367. During the six months ending June
30, 2000, we received full payment for Benefit
Packages of $3,495,889. This represents an increase of 134% on a comparable six
month year over year basis.
As of June 30, 2001, we had total current assets of $6,983,528 and cash of
$1,450,780. As of June 30, 2001 total current liabilities amounted to
$6,920,005.
42
We believe that our existing cash balances will be sufficient to meet our
working capital and capital expenditure requirements for the next 12 months and
for the foreseeable future thereafter.
To date, inflation has not had a material impact on our financial results.
However, inflation may adversely affect our future financial results.
Forward-looking Statements
This Prospectus contains statements relating to future results, which are
forward-looking statements as that term is defined in the Private Securities
Litigation Reform Act of 1995. Forward-looking statements include statements
concerning plans, objectives, goals, strategies, future events or performance
and underlying assumptions and other statements which are other than statements
of historical assumptions or facts. Specifically, this report contains forward-
looking statements regarding anticipated future sales and revenues and the
methods and strategies of increasing those sales and revenues. Actual results
may differ materially from those anticipated as a result of certain risks and
uncertainties, including but not limited to, management's ability to implement
our marketing strategy, the availability of capital through the sale of
additional common stock or other means, including the availability of products
for sale through credit insurance and distribution alliances, changes in general
economic conditions, foreign exchange rate fluctuations, competitive product and
pricing pressures, regulatory developments, as well as other risks and
uncertainties detailed from time in our Securities and Exchange Commission
filings.
Our expectations, beliefs and projections are expressed in good faith and are
believed by it to have a reasonable basis, including without limitation, data
contained in our records and other available data from third parties, but there
can be no assurance that Management's expectations, beliefs or projections will
result, or be achieved, or be accomplished.
ABSENCE OF CURRENT PUBLIC MARKET
There is no current public trading market for our shares of common stock. While
we intend to take needed action to qualify the shares for quotation on the
NASDAQ OTC Bulletin Board under the symbol concurrently with the filing of this
prospectus, there is no assurance that we can satisfy the current pertinent
listing standards or, if successful in getting listed, avoid later de-listing.
DESCRIPTION OF CAPITAL STOCK
Our common stock in not presently quoted on the OTC BB. We intend to qualify our
shares for quotation on the NASDAQ Bulletin Board concurrently with the date of
this prospectus.
Description of Securities
Our authorized capital stock consists of 10,000,000 shares of common stock,
$.001 par value. As of October 15, 2001, there are outstanding 2,500,000 shares
of our common stock.
43
The following description is a summary and is qualified in its entirety by the
provisions of our Articles of Incorporation and Bylaws, copies of which have
been filed as exhibits to this Registration Statement.
Common Stock
The holders of the issued and outstanding shares of our common stock are
entitled to receive dividends when, as and if declared by our Board of Directors
out of any funds lawfully available therefore. Our Board of Directors intends to
retain future earnings to finance the development and expansion of our business
and does not expect to declare any dividends in the foreseeable future. The
holders of our common stock have the right, in the event of liquidation, to
receive pro rata all assets remaining after payment of debts and expenses. Our
common stock does not have any preemptive rights. The issued and outstanding
shares of our common stock are fully paid and non-assessable.
Holders of shares of our common stock are entitled to vote at all meetings of
such shareholders for the election of directors and for other purposes. Such
holders have one vote for each share of our common stock held by them.
Preferred Stock
We have not issued or authorized any preferred stock as of the filing of this
registration statement.
Warrants
We have not issued any warrants as of the filing of this registration statement.
Transfer Agent
We function as our own transfer and registrar agent. Upon application to become
listed on the OTC Bulletin Board, we plan to engage the services of a
professional transfer and registrar agent for our common stock.
EXECUTIVE COMPENSATION
Compensation of Directors
Our directors will not receive compensation for services on our Board of
Directors or any committee thereof, but directors may be reimbursed for certain
expenses in connection with attendance at Board and committee meetings.
Executive Compensation
We presently have not negotiated any employment agreement with our management
personnel to retain their services.
44
Mr. Richard L. Loehr received 2,000,000 shares of common stock in exchange for
100% of his stock of Team Nationwide, Inc., pursuant to that specific Share
Exchange Agreement dated January 8, 2001 and which had an Effective Date of
December 28, 2000.
It is anticipated that executive officers may receive cash or non-cash
compensation for his or her services. It is expected that the Board of Directors
will approve the payment of salaries and/or non cash compensation in a
reasonable amount to each of our officers for their services.
Summary Compensation Table
[Download Table]
Annual Compensation Long-Term Compensation
------------------- ----------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
[Enlarge/Download Table]
Other Annul Securities
Compensa Restricted underlying LTIP
Name and Principal tion ($) Stock options/ Payouts All Other
Position Year ($) Bonus ($) Award(s) ($) SARS (#) ($) Compensation ($)
---- --- --------- ------------ -------- --- ----------------
Richard L. Loehr, 2001 $-0- $- $- $- $- $-
Chairman, President
& CEO
Douglas J. Borr,
Vice President 2001 52,000 $- $- $- $- $-
Lynda M. Davis,
VP & Secretary 2001 52,000 $- $- $- $- $-
Carol Boozer,
VP & Treasurer 2001 52,000 $- $- $- $- $-
---- ------ -- -- -- -- --
45
Stock Option Plans
We have not put into place a Stock Option Plan as of the filing of this
registration statement.
Employees and Consultants
As of June 30, 2001, our Chief Executive Officer, President & Chairman was
Richard L. Loehr.
Our core management team is comprised of our officers and directors. Management
and control of Nationwide shall at all times be retained by our officers and
directors.
SUBSCRIPTION PROCEDURE
In order to purchase shares:
1. An investor must complete and sign copy of the subscription agreement and
power of Attorney.
2. Checks (which should be at least $25,000) should be made payable as
follows:
National Companies, Inc. -- Attorney Escrow Account
3. The check and the subscription agreement should be mailed or delivered to
the escrow agent:
Anslow & Jaclin, LLP, 4400 Route 9 South, Freehold, New Jersey 07728
You must indicate in the subscription agreement your classification of net worth
as defined in "Prospectus Summary." In addition, you must indicate that you have
received this prospectus and that you are a citizen or permanent resident of the
United States.
Escrow Account
Funds from the sale of this offering will be retained in an IOLTA attorney
escrow account maintained with our securities counsel. Under pertinent Florida
regulation, interest will be paid to the Florida Bar Association for funding
attorney representation for those who cannot otherwise afford counsel.
Accordingly, any interest will not be paid to us or shareholders.
46
ERISA CONSIDERATIONS
Those who consider purchasing shares on behalf of qualified plans are urged to
consult with tax and ERISA counsel to determine that such a purchase will not
result in a violation of prohibited transaction under ERISA, the Internal
Revenue Code or other applicable law. We will rely on the determination made by
such experts, although no shares will be sold to any plans if we believe that
the sale will result in a prohibited transaction under ERISA or the Code.
LEGAL MATTERS
The validity of Shares being offered by this prospectus will be passed upon for
Nationwide by Anslow & Jaclin, LLP, Freehold, New Jersey.
EXPERTS
Our Financial Statements as of December 31, 2000 and 1999 have been included in
this Prospectus in reliance upon the report appearing elsewhere herein, of
Robert Jarkow, independent Certified Public Accountant, and upon the authority
of said independent Certified Public Accountant as an expert in accounting and
auditing.
WHERE YOU CAN FIND MORE INFORMATION
We will file annual, quarterly and current reports and other information with
the Securities and Exchange Commission (the "SEC"). Such information may be read
and any such document may be copied from the SEC at their public reference
facilities in Room 1024 at 450 Fifth Street N.W., Washington, DC 20549 or at
regional offices located at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Our SEC filings also are available to
the public on the SEC Internet site at http://www.sec.gov.
We have filed with the SEC this registration statement on Form SB-2 under the
Act which registered the shares covered by this Prospectus for resale by the
Selling Shareholders. This Prospectus is only part of the registration
statement. It does not contain all of the information shown in the registration
statement because the SEC rules and regulations allow us to include certain
information in the filing, but permit us to omit certain information from the
Prospectus. Statements contained in this Prospectus as to any contract or other
documents' contents are not necessarily complete. In each instance, if the
contract or document is filed as an exhibit to the registration statement, the
affected statement is qualified, in all aspects by reference to the applicable
exhibit to the registration statement. For further information about us or our
shares, please refer to the registration statement and the exhibits that may be
obtained from the SEC at its principal office. The SEC is paid the prescribed
fee, or such information can be obtained through the Internet site listed above.
The SEC allows us to "incorporate by reference" the information it files with
them. This means that we can disclose important information by referring the
reader to these documents. The information we incorporate by reference is an
important part of this Prospectus, and information that we file later with the
SEC will update or supercede automatically this information.
47
The reader should rely only on the information we include or incorporate by
reference in this Prospectus and any applicable prospectus supplement. We have
not authorized anyone to provide information different from that contained in
this Prospectus. The information contained in this Prospectus or the applicable
prospectus supplement is accurate only as of the date on the front of those
documents, regardless of the time of delivery of this Prospectus or the
applicable prospectus supplement or of any sale of our securities.
Any statement contained in this Prospectus or in a document incorporated or
deemed to be incorporated by reference in this Prospectus is deemed to be
modified or superseded for purposes of this Prospectus to the extent that any of
the following modifies or superseded a statement in this Prospectus or
incorporated by reference in this Prospectus:
* in the case of a statement in a previously filed document incorporated by
reference or deemed to be incorporated by reference in this Prospectus, a
statement contained in this Prospectus;
* a statement contained in any accompanying prospectus supplement
relating to a specific offering of shares; or
* a statement contained in any other subsequently filed document that
modifies or supersedes a statement in this Prospectus.
Any modified or superseded statement will not be deemed to constitute a part of
this Prospectus or any accompanying prospectus supplement, except as modified or
superseded. Except as provided by the above mentioned exceptions, all
information appearing in this Prospectus and each accompanying prospectus
supplement is qualified in its entirety by the information appearing in the
documents incorporated by reference.
We will provide, without charge to each person to whom a copy of this Prospectus
is delivered, after their written or oral request, a copy of any or all of the
documents incorporated by reference into this Prospectus, other than exhibits to
the documents, unless the exhibits are incorporated specifically by reference in
the documents. Requests may be made by writing or telephoning the following
person:
Richard L. Loehr
President & Chairman
National Companies, Inc.
4350 Oakes Road, Suite 512
Davie, FL 33314
(954) 584-5080
48
CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
We have had no changes of accountants since inception or disagreements with our
accountants with regard to any accounting or financial disclosure issues.
49
INDEX TO FINANCIAL STATEMENTS
Table of Contents
Page
Independent Auditor's Report F-1
Consolidated Balance Sheet F-2
Consolidated Statements of Operations F-3
Consolidated Statement of Shareholders' Deficit F-4
Consolidated Statements of Cash Flows F-5
Notes to Consolidated Financial Statements F-6
ROBERT JARKOW
CERTIFIED PUBLIC ACCOUNTANT
3111 North Andrews Avenue
Fort Lauderdale, Florida 33309
(954) 630-9070
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Nationwide Companies, Inc.
I have audited the accompanying consolidated balance sheet of Nationwide
Companies, Inc. as of December 31, 2000 and the consolidated statements of
operations, shareholders' deficit, and cash flows for the year ended December
31, 2000 and from January 15, 1999 (inception) to December 31, 1999. These
consolidated financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these consolidated
financial statements based on my audits.
The audits were conducted in accordance with auditing standards generally
accepted in the United States of America. Those standards require that I plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. I believe that my audits provide a reasonable basis for my
opinion.
In my opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Nationwide
Companies, Inc. as of December 31, 2000 and the results of its operations and
cash flows for the year ended December 31, 2000 and from January 15, 1999
(inception) to December 31, 1999, in conformity with accounting principles
generally accepted in the United States of America.
/s/ Robert Jarkow
--------------------------
January 17, 2001
F-1
NATIONWIDE COMPANIES, INC.
CONSOLIDATED BALANCE SHEET
December 31, 2000
ASSETS
[Download Table]
Current Assets
Cash $388,113
Prepaid commissions 3,920,035
Advance to related company 465,634
Total current assets 4,773,782
Prepaid commissions-long term 843,960
Independent marketing associate data base and web site-
net of accumulated amortization of $38,000 57,000
Equipment-net of accumulated depreciation of $10,000 5,000
TOTAL ASSETS $5,679,742
----------
LIABILITIES & SHAREHOLDERS' DEFICIT
Current Liabilities
Accounts payable and accrued liabilities $232,481
Revenue received in advance 4,871,553
Due to shareholder 50,000
Total current liabilities 5,154,034
Revenue received in advance-long term 1,036,902
Shareholders' Deficit
Common stock-par value $.001; 10,000,000 shares authorized,
2,500,000 issued and outstanding 44,682
Deficit (555,876)
Total shareholders' deficit (511,194)
TOTAL LIABILITIES & SHAREHOLDERS' DEFICIT $5,679,742
----------
The accompanying notes are an
integral part of these
financial statements.
F-2
NATIONWIDE COMPANIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
January 15, 1999 (Inception) to December 31, 1999
Year Ended December 31, 2000
[Download Table]
2000 1999
---- ----
Revenue
Benefit Package Sales $ 6,146,752 $ 2,054,949
Commissions-related party 246,000 10,600
Total Revenue 6,392,752 2,065,549
Direct costs 4,742,772 1,528,417
Gross profit 1,649,980 537,132
--------------------------------------------- ----------- -----------
Selling, general, and administrative expenses 1,121,151 1,621,837
Net income (loss) $ 528,829 ($1,084,705)
--------------------------------------------- ----------- -----------
Earnings (loss) per share-basic $ 0.21 ($ 0.43)
----------- -----------
Weighted - average common shares outstanding 2,500,000 2,500,000
----------- -----------
Pro forma Tax (Unaudited):
ThePro forma Tax is computed as if the Company was taxed for the entire periods
as a conventional Corporation under the Internal Revenue Code.
Income (loss) from operations before income tax $ 528,829 ($1,084,705)
Provision for Income Tax * 198,800 0
Net Income(loss) $ 330,029 ($1,084,705)
----------- -----------
Basic earnings (loss) per share $ 0.13 ($ 0.43)
----------- -----------
* Provision for income tax in year 2000 is calculated without the 1999
carryforward loss .
No credit in 1999 because of the uncertainty of the utilization of the loss
carry forward.
The accompanying notes are an
integral part of these
financial statements.
F-3
NATIONWIDE COMPANIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
January 15, 1999 (Inception) to December 31, 1999
Year Ended December 31, 2000
[Enlarge/Download Table]
Common Stock
Shares Amount Deficit
------ ------ -------
Initial capitalization 2,500,000 $44,682
Net (loss)
January 15, 1999 (inception) to December 31, 1999 ($1,084,705)
Balance December 31, 1999 2,500,000 44,682 (1,084,705)
--------- ------ -----------
Net income for the year ended December 31, 2000 528,829
Balance December 31, 2000 2,500,000 $44,682 ($555,876)
--------- ------- ----------
The accompanying notes are an
integral part of these
financial statements.
F-4
NATIONWIDE COMPANIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
January 15, 1999 (Inception) to December 31, 1999
Year Ended December 31, 2000
[Enlarge/Download Table]
2000 1999
---- ----
Cash flows from operating activities
Net income (loss) $ 528,829 ($1,084,705)
Adjustments to reconcile net income (loss) to net cash
provided (used) by operating activities
Depreciation and amortization 24,000 24,000
(Increase) in prepaid commissions (2,381,116) (2,382,879)
Increase in accounts payable and accrued liabilities 166,179
66,302
Increase in revenue received in advance 2,689,483 3,218,972
Total adjustments 498,546 926,395
Net cash provided (used) by operating activities 1,027,375 (158,310)
----------- -----------
Cash flows from investing activities
Advances to related company (454,235) (11,399)
----------- -----------
Cash flows from financing activities
Increase (decrease) in cash overdraft (115,709) 115,709
Sale of common stock -- 4,000
Loan from shareholder -- 50,000
Capital contribution 5,682 --
Acquisition of public shell (75,000) --
Net cash provided (used) by financing activities (185,027) 169,709
----------- -----------
Net increase in cash 388,113 0
Cash - beginning 0
Cash - end $ 388,113 $ 0
----------- -----------
Supplemental disclosures of cash flow information:
Interest paid $ 4,500 $ 4,315
Non cash financing activities
Assets contributed by shareholder in exchange for equity -- $ 110,000
----------- -----------
The accompanying notes are an
integral part of these
financial statements.
F-5
NATIONWIDE COMPANIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000
Note 1. Public Entity
On December 28, 2000, an inactive public shell corporation, Focus Financial
Group, Inc. (formed November 18, 1999), with no assets or liabilities, was
acquired by a privately held operating company. The public company changed its
name to Nationwide Companies, Inc. The owners of the private company received
80% of the public entity in exchange for 100% of their stock in the private
company and the privately owned company became a wholly owned subsidiary of the
public entity.
The transaction was accounted for as a reverse acquisition, which is a capital
transaction and not a business combination. Accordingly, the recorded assets,
liabilities, and operations of the private company were carried forward at
historical amounts and the equity has been restated to give effect to the
transaction from inception.
Note 2. Summary of Significant Accounting Policies
Nature of Operations
The Company is a direct sales organization which supplies products (for example:
new cars, jewelry, and health and skin care products) and services (for example:
health insurance, and travel services) to the Company's Associates (members)
through affiliated companies.
Principles of Consolidation
The consolidated financial statements include amounts of the subsidiary. All
intercompany accounts and transactions have been eliminated in the
consolidation.
Use of Estimates
Use of estimates and assumptions by management is required in the preparation of
financial statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates and assumptions.
Revenue Recognition of Benefit Packages
Benefit Packages and associated Direct Costs-consisting of commissions, are
deferred and recognized over the term of the membership period (one or two
years) on the straight line basis (because the Independent Marketing Associates
buying patterns are random and cannot be predicted).
The Securities and Exchange Commission issued Staff Accounting Bulletin No. 101
"Revenue Recognition in Financial Statements" in December 1999. The Company has
reviewed its revenue recognition policies and believes it is in compliance.
F-6
NATIONWIDE COMPANIES, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000
Note 2. Summary of Significant Accounting Policies (continued)
Cash Concentration
The Company maintains its cash in bank deposit accounts which may exceed the
$100,000 federally insured limits.
Independent Marketing Associates Data Base and Web Site
Independent marketing associates data base and web site is recorded at $95,000,
which was the cost to the contributing shareholder. Amortization is computed
using the straight- line method over the five year estimated useful life.
Equipment
Equipment is recorded at $15,000 which was the cost to the contributing
shareholder. Depreciation is computed using the straight-line method over the
three year estimated useful lives of the assets.
Earnings (Loss) Per Share
Earnings (loss) per share is calculated by dividing net income (loss) by the
average number of shares outstanding during the period.
At December 31, 2000 and 1999 there are no shares that would cause a dilution of
earnings (loss) per share.
Note 3. Commitments
Long-Term Operating Lease-The Company has a commitment under a lease for office
space, expiring on July 31, 2005. The following summarizes the future minimum
lease payments under the non-cancelable operating lease obligation: for 2001 is
$32,000; 2002 is $33,000; 2003 is $34,000; 2004 is $36,000 and 2005 is $21,000.
Rent expense for 2000 and 1999 was approximately $29,700 and $27,700,
respectively.
Consultant Agreement- The Company has a consulting agreement which expires
December 2002. The agreements require a monthly payment of $6,000 and may be
terminated after June 2001 by either party.
F-7
NATIONWIDE COMPANIES, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000
Note 4. Related Party Transactions
Affiliated companies- Some of the Company's products and services are supplied
by companies that are owned by the Company's majority shareholder. The
affiliated companies sell only to the Company's Independent Marketing
Associates. No revenue is realized by the Company for product or service sold by
theses affiliates. One affiliate pays a commission, based on product sales, to
the Company. The revenue received by the Company from this affiliate is
reflected in the Statement of Operations as Commissions.
At December 31, 2000, the Company has advanced, interest free, one affiliate
$465,634. This amount has been repaid in 2001.
Due to Shareholder is due on demand and bears interest at 9%. Interest expense
for 2000 and 1999 was approximately $4,500 and $4,315, respectively.
The buying patterns of the consumer are undeterminable. Therefore we are unable
to estimate the commission revenue and the resulting impact to our P&L.
Furthermore, we are unable to estimate the price and supply availability of an
unaffiliated company.
Note 5. Income Tax
Prior to the reverse acquisition, the privately held company was an S
Corporation under the Internal Revenue Code. Accordingly, it was not responsible
for payment of Income Taxes.
At December 31, 2000, there are no items that give rise to deferred income
taxes.
Note6. Common Stock
Common stock on the initial capitalization was arrived at as follows:
Assets contributed $110,000
Sale of common stock 4,000
Capital contribution 5,682
Cost of Public Shell (75,000)
-------
$44,682
F-8
NATIONWIDE COMPANIES, INC.
CONSOLIDATED FINANCIAL STATEMENTS
January 15, 1999 (Inception) to
December 31, 1999 Year Ended
December 31, 2000
Table of Contents
Consolidated Balance Sheets F-11
Consolidated Statements of Operations F-12
Consolidated Statement of Shareholders' Deficit F-13
Consolidated Statements of Cash Flows F-14
Notes to Consolidated Financial Statements F-15
NATIONWIDE COMPANIES, INC.
CONSOLIDATED BALANCE SHEETS
[Download Table]
June 30, December 31,
2001 2000
unaudited audited
--------- -------
ASSETS
Cash $ 1,450,780 $ 388,113
Prepaid commissions 5,004,301 3,920,035
Prepaid expenses 437,902 --
Advance to related company -- 465,634
Expected tax benefit 40,545 --
Deposit 50,000 --
Total current assets 6,983,528 4,773,782
Prepaid commissions-long term 3,266,872 843,960
Independent marketing associate data base,
web site and equipment- net of accumulated
amortization and depreciation of $65,770
in 2001 and $48,000 in 2000 90,409 62,000
TOTAL ASSETS $ 10,340,809 $ 5,679,742
LIABILITIES & SHAREHOLDERS' DEFICIT
Accounts payable and
accrued liabilities $ 310,598 $ 232,481
Revenue received in advance 6,609,407 4,871,553
Due to shareholder -- 50,000
Total current liabilities 6,920,005 5,154,034
3,995,415 1,036,902
Common stock-par value $.001;
10,000,000 shares authorized,
2,500,000 issued and outstanding 44,682 44,682
Deficit (619,293) (555,876)
Total shareholders' deficit (574,611) (511,194)
TOTAL LIABILITIES &
SHAREHOLDERS' DEFICIT $ 10,340,809 $ 5,679,742
The accompanying notes are an integral part of these
financial statements.
F-11
NATIONWIDE COMPANIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
[Download Table]
Three Months Ended June 30,
2001 2000
Unaudited Unaudited
--------- ---------
Revenue $ 2,115,208 $ 554,989
Benefit Package Sales 87,757 52,840
Commissions-related party 7,419 1,894
Other income 2,210,384 609,723
Direct costs 1,610,026 428,979
Gross profit 600,358 180,744
Selling, general, and
administrative expenses 591,121 345,325
Net income (loss) before
income tax 9,237 (164,581)
Provision for income tax 3,603 --
Net income (loss) $ 5,634 ($ 164,581)
Earnings (loss) per $ 0.002 ($ 0.066)
share-basic
Weighted - average common
shares outstanding 2,500,000 2,500,000
* Federal and State tax benefit computed at expected annual tax rate of 39%.
The accompanying notes are an
integral part of these
financial statements.
F-12
NATIONWIDE COMPANIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
[Download Table]
Six Months Ended June 30,
2001 2000
Unaudited Unaudited
--------- ---------
Revenue $ 3,176,756 $ 849,360
Benefit Packages 210,459 94,801
Commissions-related party 35,258 1,894
Other income 3,422,473 946,055
Direct costs 2,430,840 661,701
Gross profit 991,633 284,354
Selling, general,
and administrative expenses 1,095,595 567,827
Net (loss) before expected
tax benefit (103,962) (283,473)
Expected tax benefit * 40,545 --
Net (loss) ($ 63,417) ($ 283,473)
Earnings (loss) per
share-basic ($ 0.025) ($ 0.113)
Weighted - average common
shares outstanding 2,500,000 2,500,000
* Federal and State tax benefit computed at expected annual tax rate of 39%.
The accompanying notes are an
integral part of these
financial statements.
F-13
NATIONWIDE COMPANIES, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' DEFICIT
Six Months Ended June 30, 2001
[Download Table]
Common Stock
Shares Amount Deficit
------ ------ -------
Balance December 31, 2000 2,500,000 $44,682 ($555,876)
Net (loss) for the Six months
ended June 30, 2001 (63,417)
Balance June 30, 2001 (unaudited)
2,500,000 $44,682 ($619,293)
The accompanying notes are an integral part of these
financial statements.
F-14
NATIONWIDE COMPANIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
[Download Table]
Six Months Ended June 30,
2001 2000
Unaudited Unaudited
--------- ---------
Cash flows from operating activities
Net (loss) ($ 63,417) ($ 283,473)
Adjustments to reconcile net (loss) to net cash
provided by operating activities
Depreciation and amortization 17,770 12,000
(Increase) in prepaid commissions (3,507,178) (2,682,210)
(Increase) in prepaid expenses (437,902) --
(Increase) in expected tax benefit (40,545) --
Deposit (50,000) --
Increase in accounts payable and
accrued liabilities 78,117 36,824
Increase in revenue received
in advance 4,696,367 3,495,889
Total adjustments 756,629 862,503
Net cash provided by operating
activities 693,212 579,030
Cash flows from investing activities
Purchase of fixed assets (46,179) --
Decrease in advance to related company 465,634 --
Net cash provided by investing
activities 419,455 --
Cash flows from financing activities
(Decrease) in cash overdraft -- (115,705)
(Decrease) in due to shareholder (50,000) --
Net cash (used) by financing
activities (50,000) (115,705)
Net increase in cash 1,062,667 463,325
Cash - beginning 388,113 --
Cash - ending $ 1,450,780 $ 463,325
Supplemental disclosures of cash flow information:
Interest paid $ 0 $ 2,500
The accompanying notes are an integral part of these
financial statements.
F-15
NATIONWIDE COMPANIES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2001
UNAUDITED
Note 1. Summary of Significant Accounting Policies
Certain information and disclosures, normally included in financial statements
prepared in accordance with generally accepted accounting principles, have been
condensed or omitted in this Form 10-QSB in compliance with the Rules and
Regulations of the Securities and Exchange Commission. However, in the opinion
of Nationwide Companies, Inc. the disclosures contained in this Form 10-QSB are
adequate to make the information fairly presented. See Form 10-KSB for the year
ended December 31, 2000 and the three months ended March 31, 2001 for additional
information relevant to significant accounting policies followed by the Company.
Note 2. Basis of Presentation
In the opinion of the Company, the accompanying unaudited financial statements
reflect all adjustments (consisting of normal recurring accruals) necessary to
present fairly the financial position as of June 30, 2001 and the results of
operations for the three and six month periods ended June 30, 2001 and June 30,
2000. The results of operations for the three and six months ended June 30, 2001
are not necessarily indicative of the results which may be expected for the
entire year.
F-16
EXHIBIT A
SUBSCRIPTION AGREEMENT
The Nationwide Companies, Inc.
ATTN: Richard L. Loehr, President & Chairman
4350 Oakes Road, Suite 512
Davie, FL 33314
By executing this Subscription Agreement (the "Subscription Agreement") of
The Nationwide Companies, Inc., (hereafter, the "Company"), the undersigned
purchaser (hereafter, the "Purchaser") hereby irrevocably subscribes for shares
of common stock ("Shares") in the Company. Purchaser herewith encloses the sum
of $_________($25,000 minimum), representing the purchase of _____ Shares at
$5.00 per Share. Subscriptions, whether checks or wire transfers, should be made
payable to The Nationwide Companies, Inc.-- Attorney Escrow Account and
forwarded to the Escrow Agent, Mintmire & Associates(Attn: Donald F. Mintmire,
Esq.), 265 Sunrise Avenue, Suite 204, Palm Beach, Florida 33480. If this
Subscription Agreement is accepted, the Purchaser agrees to contribute the
amount enclosed to the Company.
Purchaser represents that he, she or it has (i) a net worth of at least
$100,000 (exclusive of home, furnishings and automobiles) or (ii) a net worth
(similarly calculated) of at least $50,000 and an annual adjusted gross income
of at least $25,000. Purchaser represents that he meets these financial
requirements and that he is of legal age. Purchaser is urged to review carefully
the responses, representations and warranties he is making herein. Purchaser
agrees that this subscription may be accepted or rejected in whole or in part by
the Company in its sole and absolute discretion.
READ THIS PROSPECTUS CAREFULLY BEFORE YOU SUBSCRIBE. CONTAINED HEREIN ARE
DISCLOSURES CONCERNING VARIOUS RISKS, CONFLICTS, FEES AND EXPENSES RELATING TO
OR TO BE PAID BY THE COMPANY.
The undersigned is reminded that:
(1) The Shares are speculative investments, the purchase of which involves a
high degree of risk of loss of the entire investment of the undersigned in
the Company.
(2) S/he is encouraged to discuss the proposed purchase with her/his attorney,
accountant or a Purchaser Representative (as defined under the Securities
Act of 1933, as amended) or take the opportunity to do so, and is satisfied
that s/he has had an adequate opportunity to ask questions concerning the
Company, the Shares and the Offering described in the Prospectus. (3) No
federal or state agency has passed upon the adequacy or accuracy of the
information set forth in the Prospectus or made any finding or
determination as to the fairness of the investment, or any recommendation
or endorsement of the Shares as an investment.
(4) S/he must not be dependent upon a current cash return with respect to
her/his investment in the Shares. S/he understands that distributions are
not required (and are not expected) to be made.
(5) The Company is not a "tax shelter" and the specific tax consequences to
her/him relative to as an investment in the Company will depend on her/his
individual circumstances.
Representations
Purchaser makes the following representations in order to permit the
Company to determine his suitability as a purchaser of Shares:
(1) The undersigned has received the Company's Prospectus and the exhibits
thereto.
(2) The undersigned understands that the Company has made all documents
pertaining to the transactions described in the Company's Prospectus available
to the undersigned in making the decision to purchase the Shares subscribed for
herein.
(3) If the Shares are being subscribed for by a pension or profit-sharing
plan, the undersigned independent trustee represents that s/he has reviewed the
plan's portfolio and finds (considering such factors as diversification,
liquidity and current return and projected return of the portfolio) this
purchase to be a prudent investment under applicable rules and regulations, and
acknowledges that no representation is made on behalf of the Company that an
investment in the Company by such plan is suitable for any particular plan or
constitutes a prudent investment thereby. Moreover, the undersigned independent
trustee represents that s/he understands that income generated by the Company
may be subject to tax, that s/he is authorized to execute such subscription on
behalf of the plan or trust and that such investment is not prohibited by law or
the plan's or trust's governing documents.
The undersigned understands and agrees that this subscription may be
accepted or rejected by the Company in whole or in part, in its sole and
absolute discretion. The undersigned hereby acknowledges and agrees that this
Subscription Agreement shall survive (i) non-material changes in the
transactions, documents and instruments described in the Prospectus, (ii) death
or disability of the undersigned and (iii) the acceptance of this subscription
by the Company. By executing this Subscription Agreement below, the undersigned
(i) acknowledge the accuracy of all statements and (ii) appoints the management
of the Company to act as his true and lawful attorney to file any documents or
take any action required by the Company to carry out its business activities.
The foregoing information which the undersigned has provided to the Company
is true and accurate as of the date hereof and shall be true and accurate as of
the date of the undersigned's admission as a Shareholder. If in any respect such
representations, warranties or information shall not be true and accurate at any
time prior to the undersigned's admission as a Shareholder, s/he will give
written notice of such fact to the Company, specifying which representation,
warranty or information is not true and accurate and the reason therefore.
By executing this Subscription Agreement, the undersigned certifies, under
penalty of perjury:
(1) That the Social Security Number or Taxpayer Identification Number
provided below is correct; and
(2) That the IRS has never notified him that s/he is subject to 20% backup
withholding, or has notified her/him that s/he is no longer subject to such
backup withholding. (Note: If this part (2) is not true in your case, please
strike out this part before signing.)
(3) The undersigned is a U.S. citizen or resident, or is a domestic
corporation, partnership or trust, as defined in the Internal Revenue Code of
1986, as amended. (Note: If this part (3) is not true in your case, please
strike out this part before signing.)
(4) That the undersigned acknowledges and agrees that this information may
be disclosed to the Internal Revenue Service by the Company and that any false
statement contained herein is punishable by fine, imprisonment or both. The
undersigned will notify the Company within sixty (60) days of the date upon
which any of the information contained herein becomes false or otherwise changes
in a material manner, or the undersigned becomes a foreign person. The
undersigned agrees to update this information whenever requested by the Company.
Under penalties of perjury, the undersigned declares that the undersigned has
examined the information contained herein and to the best of the undersigned's
knowledge and belief, it is true, correct and complete, and that the undersigned
has the authority to execute this Subscription Agreement.
This Subscription Agreement and the representations and warranties
contained herein shall be binding upon the heirs, executors, administrators and
other successors of the undersigned. If there is more than one signatory hereto,
the obligations, representations, warranties and agreements of the undersigned
are made jointly and severally. By executing this agreement, you are not waiving
any rights under federal law.
The undersigned is the following kind of entity (please check):
The undersigned is the following kind of entity (please check):
|_| Individual |_| IRA |_| Joint Account - JTWROS |_| Pension Plan |_|
Joint Account - TENCOM |_| Trust |_| UGMA (Gift to Minor) |_|Non-Profit
Organization |_| Partnership |_| Employee of NASD member firm |_|
Corporation |_| Other (Specify)
Dated this ___ day of ________ of 2001
Mr./Ms._____________________________ _________________________________
Purchaser's Name Social Security or Tax ID#
Mr./Ms._____________________________ _________________________________
Name of Second Purchaser Date of Birth of First Purchaser
------------------------------------ (------)-------------------------
Street Address of First Purchaser Business Phone (Day)
------------------------------------ (------)------------------------
City State and Zip Code Home Phone
------------------------------------
Signature of First Purchaser (Individual,
Custodian or Email address (if applicable)
Officer or Partner of Entity)
--------------------------------------------
Signature of Second Purchaser (if applicable)
NOTE: If a joint subscription, please indicate whether joint tenants with right
of survivorship (JTWROS) or tenants in common (TENCOM). Each joint tenant or
tenant in common must sign in the space provided. If purchaser is a trust,
partnership, corporation or other business association, the signing trustee,
partner or officer represents and warrants that he/she/it has full power and
authority to execute this Subscription Agreement on its behalf. If Purchaser is
a trust or partnership, please attach a copy of the trust instrument or
partnership agreement. If Purchaser is a corporation, please attach certified
corporate resolution authorizing signature.
No person is authorized in connection with any offering of the shares to
give any information or to give any representation not contained in this
Prospectus, and the reader should not rely on any such information or
representation as having been authorized by Nationwide or any Selling
Shareholder. Neither the delivery of this Prospectus nor any sale made hereunder
shall under any circumstances create any implication that the information
contained in this Prospectus is correct as of any time subsequent to the date of
this Prospectus.
Until the later of ______________ or ninety (90) days, all dealers that
effect transactions in these securities, whether or not participating in this
offering, may be required to deliver a Prospectus. This is in addition to the
dealer's obligation to deliver a Prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO BUY, BY ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THE INFORMATION IN THIS PROSPECTUS IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE OF THIS PROSPECTUS.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Reference is made to "Fiduciary Responsibility of the Our Management" contained
and "Description of Capital Stock" in the Prospectus relating to the
indemnification of the Registrant's officers, directors, stockholders, employees
and affiliates. The Registrant is prohibited from indemnifying its affiliates
for liabilities resulting from violations or alleged violations of the
Securities Act of 1933 or any state securities laws in connection with the
issuance or sale of the shares of common stock, except in the case of successful
defense of an action in which such violations are alleged, and then only if a
court approved such indemnification after being apprized of relevant regulatory
positions on indemnification.
Excerpt From "Fiduciary Responsibility of the Company's Management".
The SEC has stated that, to the extent any exculpatory or indemnification
provision purports to include indemnification for liabilities arising under the
Securities Act of 1933, as amended, it is the opinion of the SEC that such
indemnification is contrary to public policy and, therefore, unenforceable.
Shareholders who believe that the Company's management may have violated
applicable law regarding fiduciary duties should consult with their own counsel
as to their evaluation of the status of the law at such time.
Directors' Liability
Under Florida law, a director is not personally liable for monetary damages to a
company or any other person for any statement, vote, decision, or failure to
act, regarding corporate management or policy, by a director, unless the
director breached or failed to perform his duties as a director and the
director's breach of, or failure to perform, those duties constitutes or result
in: (1) a violation of the criminal law, unless the director had reasonable
cause to believe his conduct was lawful or had no reasonable cause to believe
his conduct was unlawful; (2) a transaction from which the director derived an
improper personal benefit, either directly or indirectly; (3) a circumstance
under which the director is liable for an unlawful corporate distribution; (4) a
proceeding by or in the right of us to procure a judgment in its favor or by or
in the right of a shareholder, for conscious disregard for the best interest of
the company, or willful misconduct; or (5) a proceeding by or in the right of
someone other than Nationwide or a shareholder, for recklessness or an act or
omission which was committed in bad faith or with malicious purpose or in a
manner exhibiting wanton and willful disregard of human rights, safety, or
property.
II-1
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses of this offering are estimated as follows:*
SEC Registration Fee $1,875
Blue Sky fees and expenses 5,000
Transfer Agent and Registrar fees. 1,000
Printing and engraving expenses. 3,075
Legal fees and expenses. 20,000
Accounting fees and expenses 1,500
Miscellaneous. 2,500
-----
Total. $34,950
=======
* All amounts other than the SEC registration fee are estimated.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
Within the past three years, the Registrant sold securities without registration
under the Securities Act of 1933, as amended (the "Act") as follows:
[Download Table]
SECURITIES NAMES OF CONSIDERATION EXEMPTION
SOLD INVESTORS RECEIVED FROM
REGISTRATION
500,000 Shares 43 Person(1) $4,000 Section 4(2) of the Securities
of Common Stock(1) Act and Rule 504 of Reg D
promulgated thereunder.
2,000,000 Shares 1 Person(2) $(2) Section 4(2) of the Securities
of Common Stock Act and Rule 506 of Reg D
promulgated thereunder.
(1) Forty-Three(43) investors acquired 800,000 at a cost of $4,000. Included in
the 800,000 shares is 721,000 shares of stock issued to Shelley Goldstein, our
Chief Executive Officer, President & Chairman valued at $0.001 par, $721. Ms.
Goldstein cancelled 300,000 of her common stock shares, ab initio, prior to that
certain Share Exchange Agreement mentioned below. These investors purchased
their shares pursuant to an exemption provided by Rule 504 of Regulation D of
the Securities Act. (2) The one person who was issued 2,000,000 shares of Common
Stock is Richard L. Loehr. These shares were issued to Mr. Loehr pursuant to
that Share Exchange Agreement effective December 28, 2000. See Note 6. Common
Stock, Notes to Consolidated Financial Statements dated December 31, 2000.
II-2
We relied upon Section 3(b) of the Act and Rule 504 and any other applicable
exemption for the issuance of its unregistered securities to the Selling
Shareholders identified in our SB 2 Registration Statement. In each instance,
such reliance was based on the following: (i) the aggregate offering price of
the offering of the shares of Common Stock and warrants did not exceed
$1,000,000, less the aggregate offering price for all securities sold with the
twelve months before the start of and during the offering of shares in reliance
on any exemption under Section 3(b) of, or in violation of Section 5(a) of the
Act; (ii) no general solicitation or advertising was conducted by us in
connection with the offering of any of the shares; (iii) the fact we have not
been since its inception (a) subject to the reporting requirements of Section 13
or 15(d) of the Securities Act of 1934, as amended, (b) and "investment company"
within the meaning of the Investment Company Act of 1940, as amended, or (c) a
development stage company that either has no specific business plan or purpose
or has indicated that its business plan is to engage in a merger or acquisition
with an unidentified company or companies or other entity or person.
II-3
ITEM 27. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
3(i).1 Articles of Incorporation of The Nationwide Companies, Inc., Inc., a
Florida corporation (1)
3(ii).1 Bylaws of The Nationwide Companies, Inc., Inc., a Florida corporation
(1)
4.0 * Form of Stock Certificate
4.2 Agreement for the Exchange of Common Stock (2)
4.3 Amended Agreement Agreement for the exchange of Common Stock
(3)
5.2 * Opinion of Anslow & Jaclin, LLP
10.1 Office lease for Corporate offices located in Davie, Florida
(4)
10.2 * Escrow Agreement
10.3 General Contract for services between National Companies,
Inc. and National Automotive, Inc.
10.4 General Contract for services between National Companies,
Inc. and National Travel Consultants, Inc./Uniglobe Team
Travel
10.5 General Contract for services between National Companies,
Inc. and National Health Plans Plus
10.6 General Contract for services between National Companies,
Inc. and Team Nationals Products, Inc.
23.1 * Consent of Robert Jarkow, CPA, independent Certified Public
Accountants
23.2 * Consent of Anslow & Jaclin, LLP
(1) Incorporated herein by reference to our Registration Statement on Form 10-SB
originally filed with the SEC on December 21, 1999.
(2)Incorporated herein by reference to the Company's Form 8-K originally filed
with the SEC on January 12, 2001.
(3) Incorporated herein by reference to our Form 8K Amendment 2 originally filed
with the SEC on May 11, 2001.
(4) Incorporated herein by reference to the Company's Form 10-KSB Amendment 1
originally filed with the SEC on May 17, 2001.
* Filed herewith
II-4
TABLE OF CONTENTS
Page No.
Prospectus Summary 4
Summary Financial Data 6
Risk Factors 7
Certain Relationships and Related Party Transactions 13
Use of Proceeds 14
Determination of Offering Price 15
Capitalization 15
Dilution 16
Fiduciary Responsibility of Our Management 17
Selling Security Holders 18
Share Eligible for Future Sale 22
Plan of Distribution 23
Legal Proceedings 24
Directors, Executive Officers, Promoters and Control Persons 25
Principal Shareholders 29
About Us 30
Management's Discussion and Analysis or Plan of Operation 38
Absence of Current Public Market 43
Description of Capital Stock 43
Executive Compensation 44
Subscription Procedure 46
Erisa Considerations 47
Legal Matters 47
Experts 47
Where You Can Find More Information 47
Changes and Disagreements On Accounting and Financial Disclosure 49
PROSPECTUS
Shares of Common Stock
NATIONAL COMPANIES, INC.
This Prospectus is dated
_________________, ____ 2001
49
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of Boca
Raton, State of Florida, on the day of October, 2001.
National Companies, Inc.
(Registrant)
Date: October 18, 2001 By: By: /s/ Carol Boozer
------------------------
Carol Boozer
Vice President and Treasurer
(Principal Financial Officer)
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement was signed by the following persons in the capacities and on the dates
stated.
Date Signature Title
October 18, 2001 By: /s/ Richard L. Loehr
------------------------
Richard L. Loehr Chairman & CEO
50
Dates Referenced Herein and Documents Incorporated by Reference
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